The role of spatial spillover associated with the infrastructure-economy relationship has received increasing attention in the literature. Surprisingly, in previous studies, the potential spatial spillover effect of transportation infrastructure on economic output in the U.S. agricultural sector has not been taken into account given the sector's importance in the economy and dependence on transportation. The broader effects, including the direct effect and spatial spillover effect, of transportation infrastructure on agricultural output across 44 states in the United States from 1981 to 2004 are estimated in this study. A spatial Durbin panel data model that catches spatial dependence in both dependent and explanatory variables is used. The results suggest that road disbursement in a given state has positive direct effects on its own agricultural output. Also, the spillover effect of road infrastructure on agricultural output in neighboring states varies with respect to the spatial weight matrix used in the model. Moreover, our analysis shows that enhancement in road infrastructure in the states in the U.S. central region has a larger positive spillover effect on agricultural output when compared to coastal or border states.
- Agricultural output
- Panel data
- Spatial Durbin model
- Spatial spillover effect
- Transportation infrastructure