A Svar Approach for the Spanish Regions

Within the approaches that have been applied to assess the impact of public capital on economic growth, this paper estimates the dynamic effects of public infrastructures using a structural vector autoregressive (SVAR) methodology for the Spanish regions. From a methodological point of view, our work contains different innovative features with respect to the previous studies using VAR models. The most relevant contribution is to propose a new way (through bi-regional models) to estimate the spillover effects of public capital in a region on the economic growth of the rest of regions of the country. From a policy perspective, the results highlight how these new models could contribute to the allocation of public investments in order to give promote balanced regional growth, shedding new insights into the analysis of regional economic growth processes. JEL classification: C32; E62; H54; R53