Spatio-temporal dynamics of regional economic growth: An empirical model for the Spanish Autonomous Communities

Abstract

This paper analyzes the evolution of the aggregate production in the Spanish regional economic system between 2000Q1 and 2023Q4 proposing a spatiotemporal growth model for the Autonomous Communities in Spain that simultaneously accounts for the presence of time-series dynamics, crosssectional spatial dependence, common factors, and regional heterogeneity. The econometric specification used in the empirical application includes time-lagged variables, spatial and spatiotemporal lagged variables, a dynamic common factor (the national growth), and some parameters varying regionally, so we consider all the key stylized facts that complex regional economic growth processes exhibit over time.