Economic evaluation of transportation projects: An application of Financial Computable General Equilibrium model

Euijune Kim, Geoffrey J.D. Hewings, Hidayat Amir

Research output: Contribution to journalArticlepeer-review

Abstract

We develop a Financial Computable General Equilibrium (FCGE) model that analyzes the economic impacts of infrastructure investment projects and their financing options on growth and distribution in the Indonesian economy. The FCGE model integrates the real economy with the financial one within a unified economic system, and traces the flows of financial and real resources among economic agents. The model is designed to analyze the economic effects of fiscal policies such as the transportation investment expenditures and alternative procurement approaches on economic growth and distribution among socio-economic classes, linking the investment expenditures with specific financial resources. It is possible to estimate growth and distributional effects of each project based on the financing method over the construction and the operation and maintenance periods once the information on the investment expenditures, the construction location and the changes in the accessibility generated by the project are injected into the FCGE model. The simulations on the Indonesian transportation projects reveal that the government financing with tax revenues could generate higher effects on GDP than other financing methods.

Original languageEnglish (US)
Pages (from-to)44-55
Number of pages12
JournalResearch in Transportation Economics
Volume61
DOIs
StatePublished - Mar 2017

Keywords

  • Financial CGE model
  • Infrastructure policy
  • Transportation investment

ASJC Scopus subject areas

  • Transportation
  • Economics, Econometrics and Finance (miscellaneous)

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