DYNAMIC CGE MODEL CONSIDERING DISEQUILIBRIUM ACCUMULATION PROCESS OF PRODUCTION FACTORS FOR EVALUATION OF TRANSPORT DEVELOPMENTS

Abstract

Existing computable general equilibrium (CGE) model in a static framework has weakness that it cannot simulate impacts on employment. As for neoclassical type dynamic CGE model, reproducibility of macro economic variables such as gross product and private capital investment is very bad. This paper proposes a dynamic CGE model considering disequilibrium accumulation process of labor and capital which can evaluate impacts of transport developments on employment and whose reproducibility is better than existing models. The model consists of a static CGE model for describing the economy in each year and macro economic functions that express changes in number of employees, private capital investment and private capital stock. As results of empirical analysis for an expressway development project in the Tokyo metropolitan area with the model and a neoclassical type model, it is found that project evaluation by existing CGE model or dynamic CGE model has possibility of underestimation.