Public investment spillovers in the spanish regions

In this paper we investigate the effect of public investment on output, employment and private investment in Spain and its regions, and evaluate the relevance and magnitude of the resulting regional spillover effects. To this aim, we estimate different models using the Autoregressive Vector (VAR) approach and find a positive impact in Spain and the majority of regions on GDP, private investment and, to a lesser extent, on employment. We also find significant spillover effects, whose economic relevance is interpreted from a regional perspective.