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An Analysis of the Impact of Public Infrastructure Spending in Quebec

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Author Info

  • David Bahan

    (Ministère des finances du Québec)

  • Alexandre Montelpare

    (Ministère des finances du Québec)

  • Luc Savard

    ()
    (GREDI, 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.

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File URL: http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1107.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke in its series Cahiers de recherche with number 11-07.

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Length: 27 pages
Date of creation: Jul 2011
Date of revision: Jul 2011
Handle: RePEc:shr:wpaper:11-07

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Keywords: CGE model; infrastructure; productivity;

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