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ANALYZING THE IMPACT OF PUBLIC CAPITAL STOCK USING THE NEG WAGE EQUATION: A SPATIAL PANEL DATA APPROACH
Author(s) -
GómezAntonio Miguel,
Fingleton Bernard
Publication year - 2012
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.2011.00725.x
Subject(s) - panel data , economics , endowment , spillover effect , stock (firearms) , econometrics , wage , productivity , panel analysis , simultaneous equations model , macroeconomics , labour economics , geography , philosophy , archaeology , epistemology
This paper examines the relationship between the level of public infrastructure and the level of productivity using panel data for the Spanish provinces over the period 1985–2004, a period that is particularly relevant due to the substantial changes occurring in the Spanish economy at that time. The underlying model used for the data analysis is based on the wage equation, which is one of a handful of simultaneous equations which when satisfied correspond to the short‐run equilibrium of New Economic Geography (NEG) theory. This is estimated using various spatial panel models with either fixed or random effects to allow for individual heterogeneity. Using these models, we find consistent evidence that productivity depends directly on the public capital stock endowment of each province, but also there is evidence of negative spillover effects from changes in capital stock in neighboring provinces.