Alternative Title

Applying Geographical Economics Models to Perform Economic Impact Analysis

Subject Area

Economics

Abstract

The novel models of Geographical Economy have analyzed the effects on the distribution of economic activity over the area of a given region, generated by different socio-economic shocks. For example, the costs of migrating from one place to another, as shown in Desmet et al. (2018). A key advantage of such models is that, given the structural definition of the market interactions, they can first create counterfactual scenarios based on the economic fundamentals. And second, a broad set of variables can account for that impact. These dynamic spatial general equilibrium models embody features such as measures for amenities, trade and transportation costs, productivity, and GDP that allow for multiple applications and uses. One of those is the design and evaluation of specific policies, such as the investment in infrastructure. This dissertation analyzes the application of the model to the case of the Pacific Corridor. It is a highway from Mexico City to Panama City, passing through six countries over 1.300 miles. This corridor is critical to the economic integration of that region. Desmet et al. (2018) model can account for the potential benefits of improving such infrastructure. In the first Chapter, I show how to adapt the model to create the necessary counterfactuals. The benefits are favorable for the locations near the project. In the second Chapter, I introduce an improvement to the model’s transportation costs matrix. It consists of the possibility to account for the effects of the administrative border controls (customs) on transportation costs. I used data on travel times in five regional countries to calibrate the model’s matrix. It matches the observed increase in transportation time cost due to border delays. The impact of removing such delay is more significant than the effect of the corridor on economic activity. Finally, I provide policy recommendations and the future steps of this research.

Degree Date

Spring 5-11-2024

Document Type

Thesis

Degree Name

Ph.D.

Department

Economics

Advisor

Omer Ozak

Second Advisor

Klaus Desmet

Third Advisor

Rocio Madera

Number of Pages

107

Format

pdf

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License

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