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Economic evaluation of transportation projects: An application of Financial Computable General Equilibrium model

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  • Kim, Euijune
  • Hewings, Geoffrey J.D.
  • Amir, Hidayat

Abstract

We develop a Financial Computable General Equilibrium (FCGE) model that analyzes the economic impacts of infrastructure investment projects and their financing options on growth and distribution in the Indonesian economy. The FCGE model integrates the real economy with the financial one within a unified economic system, and traces the flows of financial and real resources among economic agents. The model is designed to analyze the economic effects of fiscal policies such as the transportation investment expenditures and alternative procurement approaches on economic growth and distribution among socio-economic classes, linking the investment expenditures with specific financial resources. It is possible to estimate growth and distributional effects of each project based on the financing method over the construction and the operation and maintenance periods once the information on the investment expenditures, the construction location and the changes in the accessibility generated by the project are injected into the FCGE model. The simulations on the Indonesian transportation projects reveal that the government financing with tax revenues could generate higher effects on GDP than other financing methods.

Suggested Citation

  • Kim, Euijune & Hewings, Geoffrey J.D. & Amir, Hidayat, 2017. "Economic evaluation of transportation projects: An application of Financial Computable General Equilibrium model," Research in Transportation Economics, Elsevier, vol. 61(C), pages 44-55.
    • Handle: RePEc:eee:retrec:v:61:y:2017:i:c:p:44-55
    DOI: 10.1016/j.retrec.2016.09.002
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    7. Tamannaei, Mohammad & Zarei, Hamid & Rasti-Barzoki, Morteza, 2021. "A game theoretic approach to sustainable freight transportation: Competition between road and intermodal road–rail systems with government intervention," Transportation Research Part B: Methodological, Elsevier, vol. 153(C), pages 272-295.
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    9. Shahirari, Siroos & Rashidi, Taha & Dixit, Vinayak & Robson, Edward, 2021. "Assessing economic benefits of transport projects using an integrated transport-CGE approach," Research in Transportation Economics, Elsevier, vol. 90(C).
    10. Betarelli, Admir Antonio & Domingues, Edson Paulo & Hewings, Geoffrey John Dennis, 2020. "Transport policy, rail freight sector and market structure: The economic effects in Brazil," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 1-23.
    11. Piskin, Metin & Hewings, Geoffrey J.D. & Hannum, Christopher M., 2020. "Synergy effects of highway investments on the Turkish economy: An application of an integrated transport network with a multiregional CGE model," Transport Policy, Elsevier, vol. 95(C), pages 78-92.
    12. Siroos Shahriari & Edward N. Robson & Jason Wang & Vinayak V. Dixit & S. Travis Waller & Taha H. Rashidi, 2023. "Integrating a computable general equilibrium model with the four-step framework," Transportation, Springer, vol. 50(4), pages 1213-1260, August.
    13. Zhang, Qiang & Tong, Qiong, 2021. "The economic impacts of traffic consumption during the COVID-19 pandemic in China: A CGE analysis," Transport Policy, Elsevier, vol. 114(C), pages 330-337.
    14. Hansen, Wiljar & Johansen, Bjørn Gjerde, 2017. "Regional repercussions of new transport infrastructure investments: An SCGE model analysis of wider economic impacts," Research in Transportation Economics, Elsevier, vol. 63(C), pages 38-49.
    15. Deriu, S. & Cassar, I.P. & Pretaroli, R. & Socci, C., 2022. "The economic impact of Covid-19 pandemic in Sardinia," Research in Transportation Economics, Elsevier, vol. 93(C).
    16. Wanke, Peter & Chen, Zhongfei & Dong, Qichen & Antunes, Jorge, 2021. "Transportation Sustainability, Macroeconomics, and Endogeneity in China: A Hybrid Neural-Markowitz-Variable Reduction Approach," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    17. Bartlomiej Rokicki & Eduardo A. Haddad & Jonathan M. Horridge & Marcin Stępniak, 2021. "Accessibility in the regional CGE framework: the effects of major transport infrastructure investments in Poland," Transportation, Springer, vol. 48(2), pages 747-772, April.
    18. Dugan, Anna & Mayer, Jakob & Thaller, Annina & Bachner, Gabriel & Steininger, Karl W., 2022. "Developing policy packages for low-carbon passenger transport: A mixed methods analysis of trade-offs and synergies," Ecological Economics, Elsevier, vol. 193(C).
    19. Sun, Shanshan & Wong, Yiik Diew & Rau, Andreas, 2020. "Economic assessment of a Dynamic Autonomous Road Transit system for Singapore," Research in Transportation Economics, Elsevier, vol. 83(C).
    20. Euijune Kim & Seung-Woon Moon & Shigemi Kagawa, 2019. "Spatial economic linkages of economic growth and air pollution: developing an air pollution-multinational CGE model of China, Japan, and Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 63(2), pages 255-268, October.

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    More about this item

    Keywords

    Transportation investment; Infrastructure policy; Financial CGE model;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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