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Government public infrastructure investment and economic performance in Spain (1980–2016)

Government public infrastructure investment and economic performance in Spain (1980–2016) The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period.Design/methodology/approachThe authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data.FindingsThe findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita.Originality/valueTo the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png "Learning and Teaching in Higher Education: Gulf Perspectives" Emerald Publishing

Government public infrastructure investment and economic performance in Spain (1980–2016)

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Government public infrastructure investment and economic performance in Spain (1980–2016)

Perez-Montiel, Jose; Manera, Carles
"Learning and Teaching in Higher Education: Gulf Perspectives" , Volume 30 (90): 19 – Oct 14, 2022

Abstract

The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period.Design/methodology/approachThe authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data.FindingsThe findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita.Originality/valueTo the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data.

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Publisher
Emerald Publishing
Copyright
© Jose Perez-Montiel and Carles Manera.
eISSN
2077-5504
DOI
10.1108/aea-03-2021-0077
Publisher site
See Article on Publisher Site

Abstract

The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period.Design/methodology/approachThe authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data.FindingsThe findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita.Originality/valueTo the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data.

Journal

"Learning and Teaching in Higher Education: Gulf Perspectives" – Emerald Publishing

Published: Oct 14, 2022

Keywords: Spain; Multiplier effects; Government public infrastructure investment; Heterogeneous panel structural VAR; Dynamic acyclic graphs; Multiplier effects; E12; E60; E62; H10; H50

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