Regional Economic Output and Public Surface Transportation Infrastructure: A Spatial Granger Approach

Abstract

This paper expands upon the classical Granger causality test with spatial dimensions to investigate the causal linkages between regional economic output and surface transportation infrastructure with a focus on the Northeast Corridor in the United States. To improve the validity of estimation, a panel data set of surface transportation infrastructure including highways, public intercity railways, and public transit, which are measured in real monetary value for the period 1991-2009, is adopted. Granger causality tests with integrations of various forms of spatial spillover interactions are analyzed in different spatial vector autoregressive models. The empirical results reveal that the spatial Granger causality test is able to capture a broader geographic scale of causality than the classical approach, but the causality