An Analysis of the Impact of Public Infrastructure Spending in Quebec

David Bahan, Alexandre Montelpare and Luc Savard
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David Bahan: Ministère des finances du Québec
Alexandre Montelpare: Ministère des finances du Québec

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have thus introduced this relation into the recursive dynamic computable general equilibrium model of Quebec to assess the economic impacts of scaling up infrastructure on the economy. We use we draw our assumptions from Estache et al. (2010) combined with sectoral elasticity parameters from Harchaoui and Tarkhani (2003) based on Canadian estimations. We conduct a comparative analysis between a scenario without positive external effects of infrastructures, and another with positive externalities. The investments are financed by debt. The externalities help attenuate the negative macroeconomic effects associated with scaling up of infrastructure and amplify the positive effects.

Keywords: CGE model; infrastructure; productivity (search for similar items in EconPapers)
JEL-codes: D58 H54 H63 O47 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-07, Revised 2011-07
New Economics Papers: this item is included in nep-cmp and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:11-07

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