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GTAP Resource #4757

"Incorporating Air Transport Congestion into a Large CGE Model of the US Economy"
by Harback, Katherine, Shane Martin, Leonard Wojcik, Simon Tsao, Stephen Welman, Peter Dixon and Maureen Rimmer

Air transport, like all transportation sectors, has a strong relationship with a nation’s economic performance. Thriving economies have a greater demand for air transportation services, and economic growth is fostered by the availability of air transportation. This makes an economy-wide framework relevant for evaluating the big picture and cross-industry impacts of air transport policy and large-scale investment. One such investment is the Next Generation Air Transportation System (NextGen) initiative under way by the U.S. Federal Aviation Administration (FAA). NextGen is intended to provide a variety of benefits, including improved efficiency and mitigation of the ill effects of congestion as consumption of air transportation continues to grow 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 approach for modifying the U.S. Applied General Equilibrium (USAGE) model to reflect air transportation congestion through decreasing returns to scale (DRTS). The paper characterizes the consequence this modification has on modeled economy-wide NextGen impacts. This interdisciplinary approach uses inputs derived from simulation modeling of the National Airspace System (NAS). The results describe the incremental impacts of relaxing capacity constraints (associated with the implementation of NextGen) on the economy and key industries. This includes not only directly impacted industries such as air transportation, avionics equipage, and tourism, but also less obviously impacted industries such as computers and trucking. The welfare impacts of alternative financing (debt or cash) of NextGen for air carriers and the government are also explored....

Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2015
Created: Harback, K. (4/15/2015)
Updated: Harback, K. (6/13/2015)
Visits: 1,620
- Dynamic modeling
- Economic development
- Technological change
- Domestic policy analysis
- North America

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