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Estimating traffic demand risk - a multiscale analysis

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Abstract

This paper proposes a novel method for estimating the traffic demand risk associated with transportation. Using mathematical properties of wavelets, we develop a statistical measure of traffic demand sensitivity with respect to GDP. This measure can be adapted in a flexible way to capture risk levels relevant for different investment horizons. We demonstrate the time-scale decomposition of risk with Swedish traffic demand data for 1950-2005. In general, rail transports show a stronger co-movement with GDP than road transports. Moreover, we examine the volatility exhibited by traffic demand. Our findings suggest that rail investments are more risky than road investments. Since the findings can be used for optimal investment timing and for choice among public investment alternatives, they are deemed important for public policy in general.

Suggested Citation

  • Krüger, Niclas, 2012. "Estimating traffic demand risk - a multiscale analysis," Working papers in Transport Economics 2012:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    • Handle: RePEc:hhs:ctswps:2012_014
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    Cited by:

    1. Hultkrantz, Lars & A. Krüger, Niclas & Mantalos, Panagiotis, 2014. "Risk-adjusted long-term social rates of discount for transportation infrastructure investment," Research in Transportation Economics, Elsevier, vol. 47(C), pages 70-81.
    2. Kathrin Goldmann, 2019. "Time-declining risk-adjusted social discount rates for transport infrastructure planning," Transportation, Springer, vol. 46(1), pages 17-34, February.

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    More about this item

    Keywords

    Traffic demand; GDP growth; Wavelet; Risk; Real options; Discount rate;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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