Transportation capital and its effects on the U.S. economy: A general equilibrium approach

Trevor S. Gallen and Clifford Winston

Journal of Macroeconomics, 2021, vol. 69, issue C

Abstract: We analyze the effect of the US transportation system on economic activity by building a quantitative dynamic general equilibrium model with a taxpayer-funded transportation capital stock. We highlight stark differences between the positive welfare effects of additional infrastructure spending in the long run, and its potentially negative effects when we account for the large transition (time and delay) costs to build. We also quantify large differences between the effects of additional infrastructure spending and efficient transportation policies, such as congestion pricing and eliminating laws that artificially inflate input prices, concluding that taxpayer-funded transportation improvements that increase GDP significantly may produce smaller welfare gains than efficient policies that increase GDP modestly.

Keywords: General equilibrium; Transportation infrastructure; Efficiency (search for similar items in EconPapers)
JEL-codes: C68 H41 L91 R4 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:69:y:2021:i:c:s0164070421000392

DOI: 10.1016/j.jmacro.2021.103334

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