On the regional incidence of highway investments in the USA

The objective of this paper was to investigate the regional incidence of the aggregate effects of investment in highways in the US taking into consideration the presence of regional spillovers. The empirical results are based on VAR estimates at both the aggregate and state levels using output, employment, and investment, as well as different measures of highway investments. Empirical results allow us to establish several stylized facts. First, investment in highways affects private sector variables positively at the aggregate level as well as in most states. Second, the regional spillover effects are very significant for all private sector variables. Third, these spillovers have a clear geographical pattern in that they tend to be more important in western states and the corridor between the Great Lakes and the Gulf Coast.