Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach
AbstractIn this paper we use a top-down bottom-up CGE microsimulation model with endogenous labour supply and unemployment to explore the impact of scaling up infrastructure spending in the Philippines. In the current debate on the importance of scaling up infrastructure to stimulate growth, some analysts raise concerns about potential negative macroeconomic impacts (Dutch disease). This study aims to provide some insight into this debate by extending the analysis to include distributional analysis. We draw from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and from Fay and Yepes (2003) to include operating and maintenance costs associated with new infrastructure. We investigate two fiscal tools and foreign aid as mechanisms to fund the new infrastructure and associated costs. The distributional analysis is performed with FGT indices and growth incidence curves. Our results reveal that infrastructure spending reduces poverty. Foreign aid is shown to be the most equitable funding mechanism, whereas a value added tax provides the strongest poverty reduction.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Interational Microsimulation Association in its journal International Journal of Microsimulation.
Volume (Year): 3 (2010)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://ima.natsem.canberra.edu.au/index.htm
Investment externalities; infrastructure; foreign aid; fiscal reforms; poverty; CGE; microsimulation.;
Other versions of this item:
- Luc Savard, 2010. "Scaling up Infrastructure spending in the Philippines: A CGE top-down/bottom up microsimulation approach," Cahiers de recherche 10-06, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F35 - International Economics - - International Finance - - - Foreign Aid
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Li, Ying & Rowe, Francis, 2007. "Aid inflows and the real effective exchange rate in Tanzania," Policy Research Working Paper Series 4456, The World Bank.
- Alicia H. Munnell & Leah M. Cook, 1990.
"How does public infrastructure affect regional economic performance?,"
New England Economic Review,
Federal Reserve Bank of Boston, issue Sep, pages 11-33.
- Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 69-112.
- Shoven,John B. & Whalley,John, 1992.
"Applying General Equilibrium,"
Cambridge University Press, number 9780521319867, November.
- François Bourguignon & Amedeo Spadaro, 2006.
"Microsimulation as a tool for evaluating redistribution policies,"
Journal of Economic Inequality,
Springer, vol. 4(1), pages 77-106, April.
- François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a Tool for Evaluating Redistribution Policies," Working Papers 20, ECINEQ, Society for the Study of Economic Inequality.
- François Bourguignon & Amadéo Spadaro, 2005. "Microsimulation as a tool for evaluating redistribution policies," PSE Working Papers halshs-00590863, HAL.
- Hertel, Thomas W. & Reimer, Jeffrey J., 2004.
"Predicting the poverty impacts of trade reform,"
Policy Research Working Paper Series
3444, The World Bank.
- Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
- Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 14(4), pages 377-405.
- Joannes Mongardini & Brett Rayner, 2009. "Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries," IMF Working Papers 09/75, International Monetary Fund.
- Christopher S. Adam & David L. Bevan, 2006.
"Aid and the Supply Side: Public Investment, Export Performance, and Dutch Disease in Low-Income Countries,"
World Bank Economic Review,
World Bank Group, vol. 20(2), pages 261-290.
- Christopher Adam & David Bevan, 2004. "Aid and the Supply Side: Public Investment, Export Performance and Dutch Disease in Low Income Countries," Economics Series Working Papers 201, University of Oxford, Department of Economics.
- Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January.
- Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
- Andrew Berg & Mumtaz Hussain & Shaun K. Roache & Amber Mahone & Tokhir N. Mirzoev & Shekhar Aiyar, 2007. "The Macroeconomics of Scaling Up Aid: Lessons from Recent Experience," IMF Occasional Papers 253, International Monetary Fund.
- Stephen R. Yeaple & Stephen S. Golub, 2007. "International Productivity Differences, Infrastructure, and Comparative Advantage," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 223-242, 05.
- Fortin, Bernard & Marceau, Nicolas & Savard, Luc, 1997. "Taxation, wage controls and the informal sector," Journal of Public Economics, Elsevier, vol. 66(2), pages 293-312, November.
- François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003.
"Representative versus real households in the macro-economic modeling of inequality,"
DELTA Working Papers
2003-05, DELTA (Ecole normale supérieure).
- François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," Working Papers DT/2003/10, DIAL (Développement, Institutions et Mondialisation).
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Antonio Estache, 2007. "Infrastructure and Development: A survey of Recent and Upcoming Issues," ULB Institutional Repository 2013/44060, ULB -- Universite Libre de Bruxelles.
- James Heckman & Lance Lochner & Christopher Taber, 1998.
"Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
- James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
- Rutherford, Thomas & Tarr, David & Shepotylo, Oleksandr, 2005. "Poverty effects of Russia's WTO accession : modeling"real"households and endogenous productivity effects," Policy Research Working Paper Series 3473, The World Bank.
- Antonio Estache & Jean-François Perrault & Luc Savard, 2008. "Impact Of Infrastructure Spending In Sub-Saharan Africa: A Cge Modeling Approach," Cahiers de recherche 08-03, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
- Bourguignon, Fran.ois & Sundberg, Mark, 2006. "Absorptive Capacity and Achieving the MDGs," Working Paper Series RP2006/47, World Institute for Development Economic Research (UNU-WIDER).
- Shaohua Chen & Martin Ravallion, 2004. "Welfare Impacts of China's Accession to the World Trade Organization," World Bank Economic Review, World Bank Group, vol. 18(1), pages 29-57.
- Stifel, David C. & Thorbecke, Erik, 2003. "A dual-dual CGE model of an archetype African economy: trade reform, migration and poverty," Journal of Policy Modeling, Elsevier, vol. 25(3), pages 207-235, April.
- Luc Savard, 2004.
"Poverty and Inequality Analysis within a CGE Framework: a Comparative Analysis of the Representative Agent and Micro-Simulation Approaches,"
Cahiers de recherche
- Luc Savard, 2005. "Poverty and Inequality Analysis within a CGE Framework: A Comparative Analysis of the Representative Agent and Microsimulation Approaches," Development Policy Review, Overseas Development Institute, vol. 23(3), pages 313-331, 05.
- François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586, October.
- Andrew Feltenstein & Luciana Lopes & Janet Porras Mendoza & Sally Wallace, 2013. "“The Impact of Micro-simulation and CGE modeling on Tax Reform and Tax Advice in Developing Countries”: A Survey of Alternative Approaches and an Application to Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1309, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gijs Dekkers).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.