Measuring the Impact of Infrastructure Systems Using Computable General Equilibrium Models

With the advancement of computational technology and applied modeling platforms, the Computable General Equilibrium (CGE) model has been widely adopted for impact assessment. Current CGE modeling techniques enable analysts to achieve robust impact simulation through capturing heterogeneous regional economic structures and dynamic interactions of economic activities. However, key issues related to the sensitivity of exogenous parameters and the underpinnings of tracking policy shocks are not yet well understood. This essay addresses these critical concerns using empirical studies of transportation infrastructure as an example. Our purpose is to promote a reconsideration of the fundamentals of CGE modeling and suggest directions for future research.

[1]  T. Hertel.  Global Trade Analysis: Modeling and Applications , 1999 .

[2]  L. Klein,et al.  Econometric model-building at regional level , 1977 .

[3]  K. Derviş,et al.  General equilibrium models for development policy , 1982 .

[4]  John R. Madden,et al.  The impact of the 2002–2003 drought on Australia , 2005 .

[5]  S. Robinson,et al.  A standard computable general equilibrium (CGE) model in GAMS , 2002 .

[6]  M. Tsigas,et al.  Revised Armington Elasticities of Substitution USITC Model and the Concordance for Constructing Consistent Set for the GTAP Model , 2004 .

[7]  K. Arrow,et al.  EXISTENCE OF AN EQUILIBRIUM FOR A COMPETITIVE ECONOMY , 1954 .

[8]  Kabsung . Kim,et al.  Impacts of regional development strategies on growth and equity of Korea: A multiregional CGE model , 2002 .

[9]  Maureen T. Rimmer,et al.  The Monash style of computable general equilibrium modeling: A framework for practical policy analysis , 2013 .

[10]  John G. Fernald,et al.  Roads to Prosperity?: Assessing the Link Between Public Capital and Productivity , 1997 .

[11]  G. West,et al.  Comparison of Input–Output, Input–Output + Econometric and Computable General Equilibrium Impact Models at the Regional Level , 1995 .

[12]  K. Haynes,et al.  Transportation Capital in the United States , 2014 .

[13]  David Alan Aschauer,et al.  IS PUBLIC EXPENDITURE PRODUCTIVE , 1989 .

[14]  J. Bröcker,et al.  General Equilibrium Models for Transportation Economics , 2011 .

[15]  Garrett R. Asay,et al.  The Economic Impacts of the September 11 Terrorist Attacks: A Computable General Equilibrium Analysis , 2009 .

[16]  John R. Madden,et al.  Federal: A Two-Region Multisectoral Fiscal Model of the Australian Economy , 1995 .

[17]  Johannes Bröcker,et al.  Assessing Spatial Equity and Efficiency Impacts of Transport Infrastructure Projects , 2010 .

[18]  Pengcheng Zhang,et al.  A generalized modeling framework to analyze interdependencies among infrastructure systems , 2011 .

[19]  Dan S. Rickman,et al.  Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal , 1998 .

[20]  H. Bohlman.  The Macroeconomic Impact of Skilled Emigration from South Africa: A CGE Analysis , 2010 .

[21]  Adam Rose,et al.  The Impact of High-Speed Rail Investment on Economic and Environmental Change in China: A Dynamic CGE Analysis , 2015 .

[22]  David Hummels,et al.  Trade Elasticity Parameters for a Computable General Equilibrium Model , 2013 .

[23]  Taran Fæhn,et al.  A shaft of light into the black box of CGE analyses of tax reforms , 2015 .

[24]  J. Giesecke.  Targeting Regional Output with State Government Fiscal Instruments: A Dynamic Multi-Regional CGE Analysis , 2003 .

[25]  Peter B. Dixon,et al.  Dynamic general equilibrium modelling for forecasting and policy : a practical guide and documentation of MONASH , 2002 .

[26]  P. Dixon.  ORANI, a multisectoral model of the Australian economy , 1982 .

[27]  C. Sanchez.  Rising inequality and falling poverty in Costa Rica's agriculture during trade reform: a macro-micro general equilibrium analysis. , 2004 .

[28]  Sahara,et al.  Impact of a Lower Oil Subsidy on Indonesian Macroeconomic Performance, Agricultural Sector and Poverty Incidences: A Recursive Dynamic Computable General Equilibrium Analysis , 2007 .

[29]  Klaus Conrad,et al.  Traffic, transportation, infrastructure and externalities A theoretical framework for a CGE analysis , 1997 .

[30]  Marlon G. Boarnet,et al.  INFRASTRUCTURE SERVICES AND THE PRODUCTIVITY OF PUBLIC CAPITAL: THE CASE OF STREETS AND HIGHWAYS , 1997, National Tax Journal.

[31]  Felix K. Rioja.  Productiveness and welfare implications of public infrastructure: a dynamic two-sector general equilibrium analysis , 1999 .

[32]  S. Robinson,et al.  Free Trade Agreements and the SADC Economies , 2003 .

[33]  Euijltne Kim,et al.  Economic Gain and Loss from Public Infrastructure Investment , 2006 .

[34]  A Computable General Equilibrium Model of the U.S. Economy to Evaluate Maritime Infrastructure Investments , 2008 .

[35]  A. Rose,et al.  Greenhouse Gas Reduction Policy in the United States: Identifying Winners and Losers in an Expanded Permit Trading System , 2002 .

[36]  S. Peeta,et al.  Dynamic and disequilibrium analysis of interdependent infrastructure systems , 2014 .

[37]  Samrat Chatterjee,et al.  Economic Consequences of Aviation System Disruptions: A Reduced-Form Computable General Equilibrium Analysis , 2015 .

[38]  J. Horridge,et al.  Forecasts for Australian Regions using the MMRF-GREEN Model , 2000 .

[39]  Zhenhua Chen.  Spatial Impact of Transportation Infrastructure: A Spatial Econometric CGE Approach , 2015 .

[40]  Mark Horridge,et al.  The TERM model and its database , 2012 .

[41]  S. Robinson,et al.  A dynamic computable general equilibrium model with working capital for Honduras , 2011 .

[42]  Geoffrey J. D. Hewings,et al.  An Application of an Integrated Transport Network– Multiregional CGE Model: a Framework for the Economic Analysis of Highway Projects , 2004 .

[43]  G. Wittwer,et al.  SinoTERM, a multi-regional CGE model of China , 2007 .

[44]  J. Shoven,et al.  Applying general equilibrium , 1993 .

[45]  M. Partridge,et al.  Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis , 2010 .

[46]  Daniel J. Graham,et al.  The productivity of transport infrastructure investment: A meta-analysis of empirical evidence , 2013 .

[47]  S. Mcdonald.  The PROVIDE Project Standard Computable General Equilibrium Model , 2003 .

[48]  S. D. Bhatta,et al.  The Economic Benefits of Public Investment in Transportation , 2003 .

[49]  S. Scrieciu,et al.  The inherent dangers of using computable general equilibrium models as a single integrated modelling framework for sustainability impact assessment. A critical note on Bohringer and Loschel (2006) , 2007 .

[50]  Glyn Wittwer,et al.  Economic Modeling of Water: The Australian CGE Experience , 2012 .

[51]  Kevin T. Duffy-Deno,et al.  Public Infrastructure and Regional Economic Development: A Simultaneous Equations Approach , 1991 .

[52]  P. Buckley.  A transportation-oriented interregional computable general equilibrium model of the United States , 1992 .

[53]  D J Harmatuck.  THE INFLUENCE OF TRANSPORTATION INFRASTRUCTURE ON ECONOMIC DEVELOPMENT , 1996 .

[54]  C. Seung,et al.  The Effects of Infrastructure Investment: A Two-Sector Dynamic Computable General Equilibrium Analysis for Ohio , 2001 .

[55]  E. Gramlich,et al.  Infrastructure Investment: A Review Essay , 1994 .

[56]  D. Rickman.  Modern Macroeconomics and Regional Economic Modeling , 2010 .

[57]  E. Haddad,et al.  Regional Effects of Port Infrastructure: A Spatial CGE Application to Brazil , 2010 .

[58]  K. Strzepek,et al.  Climate Change, Growth and Infrastructure Investment: The Case of Mozambique , 2012 .