Spatial Impact of Transportation Infrastructure: A Spatial Econometric CGE Approach
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.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chiara DEL BO & Massimo FLORIO & Giancarlo MANZI, 2009.
"Regional infrastructure and convergence: growth implications in a spatial framework,"
Departmental Working Papers
2009-34, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- 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.
- John G. Fernald, 1997.
"Roads to prosperity? assessing the link between public capital and productivity,"
International Finance Discussion Papers
592, Board of Governors of the Federal Reserve System (U.S.).
- 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.
- repec:ntj:journl:v:50:y:1997:i:no._1:p:39-57 is not listed on IDEAS
- Jeffrey P. Cohen, 2007. "Economic Benefits of Investments in Transport Infrastructure," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/13, OECD Publishing.
- 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.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- 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.
- 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.
- Kevin T. Duffy-Deno & Randall W. Eberts, 1989.
"Public infrastructure and regional economic development: a simultaneous equations approach,"
8909, Federal Reserve Bank of Cleveland.
- Duffy-Deno, Kevin T. & Eberts, Randall W., 1991. "Public infrastructure and regional economic development: A simultaneous equations approach," Journal of Urban Economics, Elsevier, vol. 30(3), pages 329-343, November.
- 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.
- Jeffrey P. Cohen & Catherine J. Morrison Paul, 2003. "Spatial and supply/demand agglomeration economies: State- and industry-linkages in the U.S. food system," Empirical Economics, Springer, vol. 28(4), pages 733-751, November.
- 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.
- Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, EconWPA.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
- 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.
- 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.
- McDonald, Scott, 2005. "The PROVIDE Project Standard Computable General Equilibrium Model: Version 2," Technical Paper Series 15625, PROVIDE Project.
- 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.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p241. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If references are entirely missing, you can add them using this form.