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A Comparative Analysis of Funding Schemes for Public Infrastructure Spending in Quebec

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  • Luc Savard
  • Dorothée Boccanfuso
  • Marcelin Joanis
  • Patrick Richard

Abstract

The government of Quebec has launched a major public infrastructure spending program funded essentially by debt. This choice can have long term consequences on growth if the eviction effect is strong. In this paper, we use a recursive dynamic model of the Quebec economy to analyse alternative funding schemes for scaling up infrastructure in the province. We perform the impact analysis with and without the assumption of externalities of public infrastructure as modeled in Estache et al. (2010) combined with estimated sectoral elasticities for Quebec following the procedure proposed by Harchaoui and Tarkhani (2003) based on Canadian estimations. We conduct a comparative analysis with tax-increase scenarios on different tax bases, such as income tax, sales tax and business tax. We also run our simulations with alternative interest rates to verify if our ranking of best funding options is robust to interest rates changes. See above See above

Suggested Citation

  • Luc Savard & Dorothée Boccanfuso & Marcelin Joanis & Patrick Richard, 2012. "A Comparative Analysis of Funding Schemes for Public Infrastructure Spending in Quebec," EcoMod2012 4633, EcoMod.
  • Handle: RePEc:ekd:002672:4633
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    References listed on IDEAS

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    1. H. Ahmed & SM. Miller, 2000. "Crowding-out and crowding-in effects of the components of government expenditure," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 124-133, January.
    2. Luc Savard, 2010. "Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 43-59.
    3. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    5. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335, June.
    6. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters,in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5 National Bureau of Economic Research, Inc.
    7. Antonio Estache & L. Savard & D. Boccanfuso, 2009. "Impact Analysis of Electricity reforms in Senegal: A Macro-micro analysis," ULB Institutional Repository 2013/43904, ULB -- Universite Libre de Bruxelles.
    8. 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 l'École de gestion à l'Université de Sherbrooke.
    9. Alicia H. Munnell, 1992. "Policy Watch: Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-198, Fall.
    10. Stephanie Levy, 2007. "Public Investment to Reverse Dutch Disease: The Case of Chad," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(3), pages 439-484, June.
    11. Bernard Decaluwe & Andre Lemelin & David Bahan, 2010. "Endogenous Labour Supply with Several Occupational Categories in a Bi-regional Computable General Equilibrium (CGE) Model," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1401-1414.
    12. Abdullatif, Alani Emad M.A., 2006. "Crowding-out and Crowding-in Effects of Government Bonds Market on Private Sector Investment (Japanese Case Study)," IDE Discussion Papers 74, Institute of Developing Economies, Japan External Trade Organization(JETRO).
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    Cited by:

    1. Dorothée Boccanfuso & Luc Savard & Jonathan Goyette & Véronique Gosselin & Clovis Tanekou Mangoua, 2015. "An impact analysis of climate change on the forestry industry in Quebec. A dynamic CGE model," Cahiers de recherche 15-05, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    2. Luc Savard & Dorothee Boccanfuso & Jonathan Goyette & Véronique Gosselin & Clovis Tanekou Mangoua, 2014. "An impact analysis of the impact of climate change and adaptation policies on the forestry sector in Quebec. A dyanamic macro-micro framework," EcoMod2014 6787, EcoMod.
    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 l'École de gestion à l'Université de Sherbrooke.
    4. Dorothée Boccanfuso & Marcelin Joanis & Mathieu Paquet & Luc Savard, 2015. "The impact of infrastructure on productivity: new estimates for Québec," Cahiers de recherche Classification-JEL: C13, , Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    5. 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'Economique de l'École de gestion à l'Université de Sherbrooke.

    More about this item

    Keywords

    Canada; General equilibrium modeling; General equilibrium modeling;

    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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