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An Integrated General Equilibrium Model for Evaluating Demographic, Social and Economic Impacts of Transport Policies

Ozhan Yilmaz () and Ebru Voyvoda ()

No 1706, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: Under the legacy of dominant transport appraisal approach, which mainly relies on traditional cost-benefit assessment (CBA) analyses, candidate policies and associated projects are evaluated in a way to take primarily aggregate information into account. Although it is practical to use these methods, working with aggregate values leaves every kind of disparities aside and individual level information is lost in aggregation. This means that we need better economic models doing more than reducing outcomes of evaluated policies to numerical aggregates and averages. This study proposes a hybrid approach to grasp the heterogeneity among different agents and to endogenise interactions among different markets. A discrete choice theory-based household residential location and transport mode choice model and a traffic equilibrium model based on Wardrop’s principles are embedded in a traditional computable general equilibrium (CGE) model representing a closed urban economy. This requires fully integrating three different models (economic model, household location and mode choice model, traffic equilibrium model) using a single mathematical framework. The proposed integrated model is tested using pseudo data of a city with four districts where connection between districts are provided through two-way roads passing through a central district. Households are categorised according to their residential location, working location, preferred commuting mode and social status. Different types of transport policies (i.e. capacity increase in private transport, public transport improvement) are evaluated and impacts of these policies on such parameters like household distribution, households’ demands on consumption goods and housing, housing prices are analysed.

Keywords: Wider economy impacts; Transport Policy; Computable General Equilibrium; Discrete Choice Model (search for similar items in EconPapers)
JEL-codes: C68 R21 R41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-dcm, nep-tre and nep-ure
Date: 2017-06, Revised 2017-06
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http://erc.metu.edu.tr/en/system/files/menu/series17/1706.pdf First version, 2017 (application/pdf)

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