Research 350 - NZ Transport Agency

ECONOMIC DEVELOPMENT BENEFITS OF TRANSPORT INVESTMENT
also hampers them in the long run, as new road links will generate benefits for many years to
come. A further issue is that ACGE model solutions will converge on those offered by
(simpler) IO models at a regional level (i.e. calling into question the need for a more complex
ACGE approach).
A final point is that an IOEC model should be seen as a complement to SCBA rather than as a
supplement.
AI.2
Comments
This paper is useful for its focus on the regional perspective and the comparison of the uses
and drawbacks of the SCBA, ACGE and IOEC models. However, while it sees IOEC as a
complement to SCBA, the paper is equivocal as to which should form the basis of decisionmaking
in the case of a conflict between the results of the two. As suggested in Appendix H,
above, it is generally preferable that SCBA should form the basis of decision-making;
otherwise there is a risk that any long run growth outcomes may be inefficient.
An additional point is that, as the authors admit, no model currently meets their ‘ideal model’
specifications. Furthermore, it is far from clear whether a model meeting such specifications
could be developed and/or would yield credible results. The criteria laid down by the authors
would appear to require a level of data that is simply not available at the regional level in
many cases. In particular, as other analysts (e.g. BTE) have noted modelling of labour market
responses may prove to be extremely difficult (though such difficulties may be reduced at the
local level).
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