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Fiscal policy and growth: new results for the Spanish regions, 1967-1995

Author(s): Óscar Bajo Rubio | Carmen Díaz Roldán

Journal: Investigaciones Regionales
ISSN 1695-7253

Issue: 3;
Start page: 99;
Date: 2003;
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Keywords: economic growth | public capital | public transfers | Spanish regions

In this paper we present a new assessment of the effects of fiscal policy on economic growth, focusing on the role of public expenditure. Starting from a theoretical model where only those public expenditure items strictly presumed to influence the production process (i.e., public capital and transfers) are incorporated into the production function, we provide an empirical application for the case of the Spanish regions during the period 1967-1995. The results confirm the positive effect on growth from both public capital and transfers, being relatively more intense that of public capital for the more productive regions, and that of transfers for the less productive ones.
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