Macroeconomic Effects of Catalan Fiscal Deficit with the Spanish State (2002-2010) (?)

Abstract

Catalonia yearly contributes to the Spanish State solidarity interterritorial redistribution funds: in 2001 a 8’9% of Catalan GDP, considering the difference between what the Spanish State collect in taxes and what it expends and invests in Catalonia. Because of these yearly fiscal deficit with Spain, Catalonia is loosing its capacity to grow faster and the opportunity to converge more quickly with the EU core regions. In this paper, using a VAR model it is simulated which could be the Catalan GDP growth in the period 2002-2010, if there were a reduction of the yearly Catalan contribution to the Spanish State: the results obtained show that Catalan GDP would easily reach at 2010 the GDP per capita level of the most developed EU regions.