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Measuring the Impact of Infrastructure Systems Using Computable General Equilibrium Models

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Regional Research Frontiers - Vol. 2

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

Abstract

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.

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Notes

  1. 1.

    These countries include Brazil, China, Finland, Indonesia, Italy, Japan, Korea, New Zealand, Poland, South Africa, Sri Lanka, Sweden and USA.

  2. 2.

    As pointed out by one of our reviewers, data scarcity as well as methodological challenges of capital stock estimation should be considered as a caveat.

  3. 3.

    One should note that applications of the accumulation of financial assets/liabilities in a multi-regional CGE model would require additional specifications or assumptions than that being applied to a single-region CGE in terms of regional balance of payments, For instance, are local assets owned elsewhere and assets outside the region but owned by residents treated modeled in the same way. The implications to modeling results related to these specifications and assumptions are likely to be substantial.

  4. 4.

    It also requires zero profit in production given the assumption of perfect competition. In the situation of non-perfect competition, Mark-up is normally required to be provided exogenously. See Francois (1998).

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Authors and Affiliations

  1. City and Regional Planning, The Ohio State University, Columbus, OH, USA

    Zhenhua Chen

  2. Schar School of Policy and Government, George Mason University, Arlington, VA, USA

    Kingsley E. Haynes

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  1. Zhenhua Chen
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  2. Kingsley E. Haynes
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Correspondence to Zhenhua Chen .

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Editors and Affiliations

  1. Regional Research Institute, West Virginia University, Morgantown, West Virginia, USA

    Randall Jackson

  2. Division of Resource Economics and Management, Faculty Research Associate, Regional Research Institute, West Virginia University, Morgantown, West Virginia, USA

    Peter Schaeffer

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Chen, Z., Haynes, K.E. (2017). Measuring the Impact of Infrastructure Systems Using Computable General Equilibrium Models. In: Jackson, R., Schaeffer, P. (eds) Regional Research Frontiers - Vol. 2. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-50590-9_5

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