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An Analysis of the Impact of Public Infrastructure Spending in Quebec

Author

Listed:
  • David Bahan

    (Ministère des finances du Québec)

  • Alexandre Montelpare

    (Ministère des finances du Québec)

  • Luc Savard

    (Département d'économique and GRÉDI, Université de Sherbrooke)

Abstract

The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have thus introduced this relation into the recursive dynamic computable general equilibrium model of Quebec to assess the economic impacts of scaling up infrastructure on the economy. We use we draw our assumptions from Estache et al. (2010) combined with sectoral elasticity parameters from Harchaoui and Tarkhani (2003) based on Canadian estimations. We conduct a comparative analysis between a scenario without positive external effects of infrastructures, and another with positive externalities. The investments are financed by debt. The externalities help attenuate the negative macroeconomic effects associated with scaling up of infrastructure and amplify the positive effects.

Suggested Citation

  • David Bahan & Alexandre Montelpare & Luc Savard, 2011. "An Analysis of the Impact of Public Infrastructure Spending in Quebec," Cahiers de recherche 11-07, Departement d'économique de l'École de gestion à l'Université de Sherbrooke, revised Jul 2011.
    • Handle: RePEc:shr:wpaper:11-07
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    Download full text from publisher

    File URL: http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1107.pdf
    File Function: First version, 2011
    Download Restriction: no
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    Citations

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    Cited by:

    1. Lemelin, André & Savard, Luc, 2022. "What do CGE models have to say about fiscal reform?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 758-774.
    2. Dorothée Boccanfuso & Marcelin Joanis & Mathieu Paquet & Luc Savard, 2015. "Impact de productivité des infrastructures: Une application au Québec," Cahiers de recherche 15-06, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.

    More about this item

    Keywords

    CGE model; infrastructure; productivity;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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