A comparative analysis of funding schemes for public infrastructure spending in Quebec

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 introduced this relationship into a recursive dynamic computable general equilibrium model of the Quebec economy to investigate various funding schemes to scale up infrastructure spending in the province. We draw our assumptions from Estache et al. (2010) combined with sectoral elasticity parameters. We conduct a comparative analysis where the funding comes from debt alone, and debt with sales tax, income tax and business tax. Our main finding is that the income tax seems to produce the most positive effects and the businesses tax the most negative effects, though differences are small.

The Impact of Infrastructure Spending in Sub-Saharan Africa: A CGE Modeling Approach

“…The choice of using a static model is guided by the fact that in two previous papers using recursive dynamic CGE models to perform a comparative analysis of funding schemes to scale up infrastructure, the ranking of the funding options is the same after the first run (equivalent to a static model) compared to the end of the resolution. Hence, the ranking of funding scheme in Bayoudh [21] and in Boccanfuso et al [22] is robust to this choice. The second reason behind this choice is the volume of simulations performed.…”

“…It is therefore important to select the most appropriate mode to fund infrastructure construction. Authors such as Savard [20] and Bayoudh [21] have investigated this issue using CGE models in developing economies and Boccanfuso et al [22] for a developed economy.…”

Potential effects of scaling-up infrastructure in Peru: a general equilibrium model-based analysis

“…In this spirit, in addition to the common short-term multiplier or crowding-on effects usually captured in models, some recent CGE studies drawing on growth theory have for instance introduced the positive externalities that public spending on new infrastructure can generate on private 3 activities' output (see e.g. Rioja, 2001;Adam and Bevan, 2006;Estache et al, 2012;Cockburn et al, 2013;Boccanfuso et al, 2014;Borojo, 2015;Chitiga et al 2016;Mbanda and Chitiga, 2017). However, these studies have rarely valued these critical parameters accurately and often take them from the extant empirical literature which has considerably grown up since the seminal works of Aschauer (1989) or Munnell (1992).…”

Public Infrastructure and Economic Growth in Pakistan: A Dynamic CGE-Microsimulation Analysis

“…Several studies providing such important insights should be mentioned here: Giesecke et al (2008) who study macroeconomic outcomes under alternative public infrastructure financing arrangements (also see Boccanfuso et al 2012); Adam and Bevan (2006) look at the role of aid in public investment and possible Dutch disease effects (also see Levy 2007). …”