IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa13p241.html
   My bibliography  Save this paper

Spatial Impact of Transportation Infrastructure: A Spatial Econometric CGE Approach

Author

Listed:
  • Zhenhua Chen

Abstract

Transportation infrastructure plays an important role in regional economic development both in the stimulation of growth and as a response to output expansion. However, measuring these effects quantitatively has been a challenge due to the complicated impact mechanisms of transportation infrastructure. This complication is due to two reasons: first, regional impacts of transportation infrastructure are achieved through a mechanism that involves both a demand influence through the variation of transportation price and a supply influence implemented through the variation of transportation cost; second, impacts of transportation are usually evaluated in a regional context where the presence of unobserved local or regional variables may give rise to spatial autocorrelation. As a result, impact analysis may become biased and spurious. This study develops a new method called Spatial Econometric Computable General Equilibrium (SECGE) model, which integrates both spatial econometrics with equilibrium modeling techniques to improve the effectiveness of impact analysis on transportation infrastructure. This study differs from previous studies in the following three aspects: First, through a spatial autocorrelation test, the presence of spatial dependence is observed and confirmed among the elasticities of factor substitution in the US. To deal with spatial dependence, spatial panel econometric techniques are introduced to estimate the elasticity of factor substitution of different sectors for the Constant Elasticity of Substitution (CES) production function with consideration of spatial direct and indirect effects. Second, transportation impact analysis is conducted under different scenarios of general equilibrium frameworks. Unlike partial equilibrium analysis, general equilibrium analysis allows researchers to obtain much comprehensive understanding of transportation infrastructure's impacts given its consideration of interactions between the demand and the supply. The study validates the method by comparing traditional equilibrium simulation without controlling for spatial dependence and the new equilibrium simulation with consideration of spatial dependence. The comparison allows researchers to justify spatial impacts of transportation infrastructure. Third, the study is conducted with a focus on multiple modes of transportation that includes road, rail, air, transit, pipeline and water transportation. Unlike a unimodal perspective, the perspective of multiple modes is essential to achieve a comprehensive understanding of the transportation infrastructure systems. It also enables us to compare impacts between different types of infrastructures and understand the relative importance of transportation investment by mode. The study confirms that the US highway and streets plays a dominant role among all transportation infrastructure systems in economic development while public transit and passenger transportation only plays the least important role among the systems. The result general equilibrium analysis also shows a difference between using spatial econometric estimates and traditional OLS estimates. Although the differences are relatively small in this aggregate case study, implications for more sensitive disaggregated regional models are clear.

Suggested Citation

  • Zhenhua Chen, 2013. "Spatial Impact of Transportation Infrastructure: A Spatial Econometric CGE Approach," ERSA conference papers ersa13p241, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa13p241
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_00241.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Boarnet, Marlon G., 1997. "Infrastructure Services and the Productivity of Public Capital: The Case of Streets and Highways," National Tax Journal, National Tax Association, vol. 50(1), pages 39-57, March.
    2. Kevin T. Duffy-Deno & Randall W. Eberts, 1996. "Public Infrastructure and Regional Economic Development: A Simultaneous Equations Approach," Book chapters authored by Upjohn Institute researchers, in: Niles Hansen & Kenneth J. Button & Peter Nijkamp (ed.),Regional Policy and Regional Integration, pages 295-309, W.E. Upjohn Institute for Employment Research.
    3. Douglas Holtz-Eakin & Amy Schwartz, 1995. "Spatial productivity spillovers from public infrastructure: Evidence from state highways," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(3), pages 459-468, October.
    4. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    5. Boarnet, Marlon G., 1997. "Infrastructure Services and the Productivity of Public Capital: The Case of Streets and Highways," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(1), pages 39-57, March.
    6. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    7. Boarnet, Marlon G. & Haughwout, Andrew F., 2000. "Do Highways Matter? Evidence and Policy Implications of Highways' Influence on Metropolitan Development," University of California Transportation Center, Working Papers qt5rn9w6bz, University of California Transportation Center.
    8. Haddad, Eduardo A. & Hewings, Geoffrey J.D., 2005. "Market imperfections in a spatial economy: some experimental results," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 476-496, May.
    9. Jeffrey P. Cohen, 2007. "Economic Benefits of Investments in Transport Infrastructure," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/13, OECD Publishing.
    10. Jeffrey P. Cohen & Catherine J. Morrison Paul, 2004. "Public Infrastructure Investment, Interstate Spatial Spillovers, and Manufacturing Costs," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 551-560, May.
    11. John G. Fernald, 1999. "Roads to Prosperity? Assessing the Link between Public Capital and Productivity," American Economic Review, American Economic Association, vol. 89(3), pages 619-638, June.
    12. Berndt, Ernst R & Hansson, Bengt, 1992. " Measuring the Contribution of Public Infrastructure Capital in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 151-168, Supplemen.
    13. Harry H. Kelejian & Dennis P. Robinson, 1997. "Infrastructure Productivity Estimation And Its Underlying Econometric Specifications: A Sensitivity Analysis," Papers in Regional Science, Wiley Blackwell, vol. 76(1), pages 115-131, January.
    14. Richard H. Mattoon, 2002. "Midwest infrastructure: assessing the contribution of basic infrastructure to economic growth," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Dec.
    15. U. Blum, 1982. "Effects Of Transportation Investments On Regional Growth: A Theoretical And Empirical Investigation," Papers in Regional Science, Wiley Blackwell, vol. 49(1), pages 169-184, January.
    16. Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, University Library of Munich, Germany.
    17. Jeffrey P. Cohen & Catherine J. Morrison Paul, 2009. "Spatial and supply/demand agglomeration economies: State- and industry-linkages in the U.S. food system," Studies in Empirical Economics, in: Giuseppe Arbia & Badi H. Baltagi (ed.), Spatial Econometrics, pages 263-281, Springer.
    18. Berndt, Ernst & Hansson, Bengt, 1992. "Measuring the Contribution of Capital in Sweden," Working Paper Series 365, Research Institute of Industrial Economics.
    19. 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.
    20. Mercedes Gumbau Albert & Joaquín Maudos Villarroya & Pedro Cantos, 2002. "Transport Infrastructures And Regional Growth: Evidence Of The Spanish Case," Working Papers. Serie EC 2002-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    21. Chiara Del Bo & Massimo Florio & Giancarlo Manzi, 2010. "Regional Infrastructure and Convergence: Growth Implications in a Spatial Framework," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(3), pages 475-493, September.
    22. Pedro Cantos & Mercedes Gumbau‐Albert & Joaquín Maudos, 2003. "Transport infrastructures, spillover effects and regional growth: evidence of the Spanish case," Transport Reviews, Taylor & Francis Journals, vol. 25(1), pages 25-50, December.
    23. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2003. "Airport infrastructure spillovers in a network system," Journal of Urban Economics, Elsevier, vol. 54(3), pages 459-473, November.
    24. Johannes Brocker & d’Artis Kancs, 2001. "Methodology for the Assessment of Spatial Economic Impacts of Transport Projects and Policies," EERI Research Paper Series EERI_RP_2001_03, Economics and Econometrics Research Institute (EERI), Brussels.
    25. Ozbay, Kaan & Ozmen-Ertekin, Dilruba & Berechman, Joseph, 2007. "Contribution of transportation investments to county output," Transport Policy, Elsevier, vol. 14(4), pages 317-329, July.
    26. McDonald, Scott, 2005. "The PROVIDE Project Standard Computable General Equilibrium Model: Version 2," Technical Paper Series 15625, PROVIDE Project.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhenhua Chen & Kingsley E. Haynes, 2015. "Regional Impact of Public Transportation Infrastructure," Economic Development Quarterly, , vol. 29(3), pages 275-291, August.
    2. Zhenhua Chen & Kingsley Haynes, 2015. "Multilevel assessment of public transportation infrastructure: a spatial econometric computable general equilibrium approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 663-685, May.
    3. Zhenhua Chen & Kingsley E. Haynes, 2015. "Public surface transportation and regional output: A spatial panel approach," Papers in Regional Science, Wiley Blackwell, vol. 94(4), pages 727-751, November.
    4. Chen, Zhenhua & Haynes, Kingsley E., 2013. "Transportation Capital in the US: A Multimodal General Equilibrium Analysis," Conference papers 332323, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Elburz, Zeynep & Nijkamp, Peter & Pels, Eric, 2017. "Public infrastructure and regional growth: Lessons from meta-analysis," Journal of Transport Geography, Elsevier, vol. 58(C), pages 1-8.
    6. Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Alfredo M. Pereira & Jorge M. Andraz, 2013. "On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
    8. Pedro R. D. Bom & Jenny Ligthart, 2008. "How Productive is Public Capital? A Meta-Analysis," CESifo Working Paper Series 2206, CESifo.
    9. Konno, Akio & Kato, Hironori & Takeuchi, Wataru & Kiguchi, Riku, 2021. "Global evidence on productivity effects of road infrastructure incorporating spatial spillover effects," Transport Policy, Elsevier, vol. 103(C), pages 167-182.
    10. Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2012. "Network effects of public transport infrastructure: Evidence on Italian regions," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 515-541, August.
    11. Tong, Tingting & Yu, Tun-Hsiang Edward & Cho, Seong-Hoon & Jensen, Kimberly & De La Torre Ugarte, Daniel, 2013. "Evaluating the spatial spillover effects of transportation infrastructure on agricultural output across the United States," Journal of Transport Geography, Elsevier, vol. 30(C), pages 47-55.
    12. Zhenhua Chen & Kingsley B. Haynes, 2014. "Regional Economic Output and Public Surface Transportation Infrastructure: A Spatial Granger Approach," The Review of Regional Studies, Southern Regional Science Association, vol. 44(3), pages 263-279, Winter.
    13. Marinos, Theocharis & Belegri-Roboli, Athena & Michaelides, Panayotis G. & Konstantakis, Konstantinos Ν., 2022. "The spatial spillover effect of transport infrastructures in the Greek economy (2000–2013): A panel data analysis," Research in Transportation Economics, Elsevier, vol. 94(C).
    14. Michael L. Lahr & Rodrigo Duran & Anupa Varughese, 2004. "Estimating the Impact of Highways on Average Travel Velocities and Market Size," Urban/Regional 0403009, University Library of Munich, Germany.
    15. Taotao Deng, 2013. "Impacts of Transport Infrastructure on Productivity and Economic Growth: Recent Advances and Research Challenges," Transport Reviews, Taylor & Francis Journals, vol. 33(6), pages 686-699, November.
    16. Brian A. Mikelbank & Randall W. Jackson, 2000. "The Role of Space in Public Capital Research," International Regional Science Review, , vol. 23(3), pages 235-258, July.
    17. Ozbay, Kaan & Ozmen-Ertekin, Dilruba & Berechman, Joseph, 2007. "Contribution of transportation investments to county output," Transport Policy, Elsevier, vol. 14(4), pages 317-329, July.
    18. Pedro R.D. Bom & Jenny E. Ligthart, 2014. "What Have We Learned From Three Decades Of Research On The Productivity Of Public Capital?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 889-916, December.
    19. Xavier Fageda & Marta Gonzalez-Aregall, 2014. "“The Spatial effects of transportation on industrial employment ”," IREA Working Papers 201429, University of Barcelona, Research Institute of Applied Economics, revised Nov 2014.
    20. Barabas, György & Kitlinski, Tobias & Schmidt, Christoph M. & Schmidt, Torsten & Siemers, Lars-H. & Brilon, Werner, 2010. "Verkehrsinfrastrukturinvestitionen: Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik. Endbericht - Januar 2010. Forschungsprojekt im Auftrag des Bundesministeriums der Finanzen. Projektnumm," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72601.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p241. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.