Linking CGE and specialist models: Deriving the implications of highway policy using USAGE-Hwy

Abstract

Scientists/engineers create specialist partial-equilibrium models of energy, environment and transportation. We show how technical information from such models can be transferred into a CGE model. We illustrate the approach by describing the creation and application of USAGE-Hwy which combines USAGE, a CGE model of the U.S., with HERS, a specialist highway model. USAGE-Hwy translates micro information from HERS on the effects of highway expenditure programs into implications for GDP, employment, and the trade-off between current and future living standards. Combination models such as USAGE-Hwy bring scientific/engineering information into the economic domain, facilitating its use in policy discussions.