General Equilibrium Model for transport

More particularly, the model CGE-Transport not only allows the impact of the economy on transport demand to be calculated but also determines the (indirect) impact of the evolution of transport demand on the economy. This approach thus makes it possible to calculate the impact of a transport policy on social welfare by including the effects on institutional sectors (enterprises, households, governments, etc.) and not only on the transport sector.

Description

The current version of the computable general equilibrium model CGE-Transport is of the static type.

Households maximize their utility under monetary and time budget constraints, which yields demand for basic products and leisure. Labour supply is endogenous and depends on net wages and commuting costs (monetary as well as time costs). For both leisure trips and commuting journeys, they choose between different modes and between two time periods: peak and off peak hours.

Firms minimize production costs, choosing the optimal mix of labour, capital and intermediate inputs. These inputs are broken down into four modes (trucks, light-duty vehicles, inland waterways and rail); the two road transport modes are further differentiated by time period. For households as well as firms, time costs of road transport are endogenous and depend on the traffic flow.

The government is modelled as a passive actor, levying taxes, making transfers and consuming goods according to mostly exogenous parameters and simple growth rules. 

The first version of the model was developed through funding from the Belgian Science Policy Office (see the LIMOBEL project (2010) on www.belspo.be). The model is now being further developed at the FPB.