Geoscience Reference
In-Depth Information
10
Spatial Impact of Transportation
Infrastructure: A Spatial Econometric CGE
Approach
Zhenhua Chen and Kingsley E. Haynes
Abstract
This study introduces a new method called Spatial Econometric Computable
General Equilibrium (SECGE), which integrates both spatial econometrics with
computable general equilibrium modeling to improve the effectiveness of
impact analysis on transportation infrastructure. Elasticities of factor substi-
tution for the Constant Elasticity Substitution (CES) production function are
estimated in a spatial econometric model with consideration of spatial depen-
dence. CGE simulations adopting different substitution elasticities show a differ-
ence between spatial econometric estimation and traditional OLS estimation.
Although the differences are relatively small in this aggregate case study,
implications for more sensitive disaggregated regional models are clear.
10.1
Introduction
Transportation infrastructure plays an important role in regional economic devel-
opment both in the stimulation of growth and as a response to output expansion
(Haynes
2006
). However, measuring these effects has proved difficult due to
the complicated transmission mechanisms of transportation infrastructure. This
complication is due to two reasons: first, regional impacts of transportation infra-
structure 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, if not taking
these interactions into account, impact analysis may become biased and spurious.
This study introduces a new method called Spatial Econometric Computable
