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Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach

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  • Luc Savard

    ()
    (GREDI, Faculté d'administration, Université de Sherbrooke, 2500 Bld de l'Université, Sherbrooke, Québec, Canada, J1K 2R1)

Abstract

In 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.

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File URL: http://ima.natsem.canberra.edu.au/IJM/V3_1/IJM_28.pdf
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Bibliographic Info

Article provided by Interational Microsimulation Association in its journal International Journal of Microsimulation.

Volume (Year): 3 (2010)
Issue (Month): 1 ()
Pages: 43-59

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Handle: RePEc:ijm:journl:v:3:y:2010:i:1:p:43-59

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Web page: http://ima.natsem.canberra.edu.au/index.htm

Related research

Keywords: Investment externalities; infrastructure; foreign aid; fiscal reforms; poverty; CGE; microsimulation.;

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Cited by:
  1. George Verikios & Xiao-guang Zhang, 2014. "Structural change and income distribution: the case of Australian telecommunications," Centre of Policy Studies/IMPACT Centre Working Papers g-240, Victoria University, Centre of Policy Studies/IMPACT Centre.
  2. George Verikios & Xiao-guang Zhang, 2013. "Reform of Australian Urban Transport: A CGE-Microsimulation Analysis of the Effects on Income Distribution," Centre of Policy Studies/IMPACT Centre Working Papers g-239, Victoria University, Centre of Policy Studies/IMPACT Centre.
  3. Dorothée Boccanfuso & Véronique Gosselin & Jonathan Goyette & Luc Savard & Clovis Tanekou Mangoua, 2014. "An impact analysis of climate change and adaptation policies on the forestry sector in Quebec. A dynamic macro-micro framework," Cahiers de recherche 14-04, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  4. Hélène Maisonnave & Ramos Mabugu & Margaret Chitiga & Véronique Robichaud, 2013. "Analysing Job Creation Effects of Scaling Up Infrastructure Spending in South Africa," Cahiers de recherche 1310, CIRPEE.
  5. 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.

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