An econometric evaluation of the management of large-scale transport infrastructure in Spain during the great recession: Lessons for infrastructure bubbles

This paper reviews the way that air, rail, and toll motorways infrastructure have evolved in Spain since the beginning of the century, when all these types of transport have been subjected to a far-reaching economic crisis. Investments made in infrastructure during this time will also be analyzed in relative terms and compared to other countries in the European Union, as will the various policies applied to each of these modes of transport. The methodology applied in this paper is of the bottom-up type, in the sense that a thorough univariate-uniequational analysis is performed before proceeding to more complex, multivariate models. We found that the policy to drop fare prices for the HSR (AVE) has had an almost 14% positive effect on the number of passengers per kilometer for HS and long-distance trains, but it has also had a negative effect of as much as 16.7% on the number of domestic air passengers. The increase in airport taxes has not affected any of the endogenous variables, or major public investments in air terminals and new HSR lines, except for the Madrid-Barcelona AVE and Barcelona's T1. Domestic air transport has been seen to be more sensitive to the economic cycle than the other modes of transport. This paper contains a set of results that justify the need to use full and accurate “economic modeling” in the planning and management of what is generally very costly transport infrastructure.