The objective of this paper is to investigate the effects of public infrastructure on regional economic performance in Spain. The empirical results are based on VAR models relating output, employment, private capital, and public infrastructure. We estimate models at the aggregate level and for each of the 17 regions of Spain. In the regional models, both public infrastructure in the region and public infrastructure elsewhere are considered, thereby taking into consideration the possible existence of regional spillovers. Our empirical results show that regional spillovers are very important, and that although public infrastructure has been a powerful instrument to promote long-term growth, it has done so in a way that is unbalanced across regions. This means that aggregate convergence in Spain to EU standards of living has been achieved at the cost of increased domestic asymmetries.

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Public infrastructure,Regional spillovers,Regional asymmetries