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Transportation capital and its effects on the U.S. economy: A general equilibrium approach

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  • Gallen, Trevor S.
  • Winston, Clifford

Abstract

We analyze the effect of the US transportation system on economic activity by building a quantitative dynamic general equilibrium model with a taxpayer-funded transportation capital stock. We highlight stark differences between the positive welfare effects of additional infrastructure spending in the long run, and its potentially negative effects when we account for the large transition (time and delay) costs to build. We also quantify large differences between the effects of additional infrastructure spending and efficient transportation policies, such as congestion pricing and eliminating laws that artificially inflate input prices, concluding that taxpayer-funded transportation improvements that increase GDP significantly may produce smaller welfare gains than efficient policies that increase GDP modestly.

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  • Gallen, Trevor S. & Winston, Clifford, 2021. "Transportation capital and its effects on the U.S. economy: A general equilibrium approach," Journal of Macroeconomics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:jmacro:v:69:y:2021:i:c:s0164070421000392
    DOI: 10.1016/j.jmacro.2021.103334
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    More about this item

    Keywords

    General equilibrium; Transportation infrastructure; Efficiency;
    All these keywords.

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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