GTAP Resources: Resource Display
| GTAP Resource #4078 |
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"Public Infrastructure and Economic Growth in Pakistan: A Dynamic CGE- microsimulation Analysis" by Ahmed, Vaqar, Ahsan Abbas and Muhammad Zeshan Abstract This paper has used a dynamic CGE model linked with a micro-simulations to estimate the macro-micro impact of public investment in infrastructure. The simulations are carried out through two different methods. In first case, it raises the public investment for infrastructure through increase in production taxes and in second case through foreign borrowing. The results reveal that the choice between tax versus international financing leads to macroeconomic gains and improvements in poverty level. In short run, tax financing puts strain on the industrial sector’s output and thereby leads to a reduction in economic growth. However, financing from international borrowing has a Dutch disease impact indicating a decline in exports. The real GDP grew in the longer run by 1.01% and 1.29% under tax financing and borrowing financing respectively. For the same time period household consumption increased by 0.94% and 1.2% respectively. In case of tax financed increase the loss of consumption and investment in the first period is compensated via supply side expansion over the longer run. The poverty headcount ratio improved by 0.31% and 0.4% under tax financing and international borrowing financing respectively. Both cases indicate a smaller improvement in inequality as well over the longer run. Further the impact of public investment depends not only on the size of investment but the efficiency with which this invested sum is utilized and absorbed. It also depends on the sectors in which the government intervenes. It is important not to compete with the private sector and instead only focus on areas that exhibit a market failure. In raising revenues through taxation, it will be important to see which sectors are taxed and in what manner. In order to allow direct taxes to increase, the government will have to take measures that remove market irritants and reduce barriers to entry and exit for the private sector. |
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- Baseline development - Calibration and parameter estimation - Dynamic modeling - Economic analysis of poverty - Economic development - Economic growth - Asia (South-Central) |
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Public Access  FINALREPORT (383.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions This is the research manuscript draft. |
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Last Modified: 9/15/2023 2:05:45 PM
