Incorporating Air Transport Congestion into a Computable General Equilibrium Model of the US Economy

Katherine T. Harback, Shane L. Martin, Simon Tsao, Stephen K. Welman, Leonard A. Wojcik, Peter B. Dixon and Maureen T. Rimmer

No 332583, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Air transport, like all transport sectors, has a strong relationship with national-economic performance. Consequently, investments that produce large changes in the availability of air transportation will have impacts on overall economic growth. This relationship makes an economy-wide framework relevant for evaluating the aggregate and cross-industry impacts of air transport policy and large-scale investment. One such investment is the Next Generation Air Transportation System (NextGen) initiative of the U.S. Federal Aviation Administration (FAA). In part, NextGen is intended to reduce the growth of congestion as the consumption of air transportation continues to increase in the future. Computable General Equilibrium (CGE) models describe an economy by linking supply and demand for all commodities and include macroeconomic relationships. This paper describes an interdisciplinary approach for modifying the U.S. Applied General Equilibrium (USAGE) model to reflect air transportation congestion through decreasing returns to scale (DRTS), and characterizes the consequence this modification has on modeled economy-wide NextGen impact.

Keywords: Public Economics; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 28
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332583

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