C-Bridge: linking CBA and CGE

Cost-Benefit Analysis (CBA) has been established as one of the most appropriate methods for evaluating welfare impacts associated with infrastructure projects. Its main advantage lies in the ability to measure social benefits, something that goes beyond traditional income transfers between different economic agents. For this reason, one of the most frequent approaches is the comparison of surpluses before and after the investment in an infrastructure project. However, this tool is not capable of capturing the implications in secondary markets or the indirect effects generated.

In order to consider, in the evaluation of projects, the restrictions associated with the resources and the variations and sensitivity of prices and wages, the Computable General Equilibrium (CGE) can be used.

The objective of this project is how to combine both tools. For this reason, on the one hand, it is proposed to formulate a theoretical framework of the connection or the bridge that can be established between CGE and CBA. On the other hand, it is intended to consider the empirical implications, so that, in the end, the divergence between CBA and CGE is identified and quantified according to the different market structures.

Technical details

Participating entities: University of Las Palmas de Gran Canaria, Universitet UMEA – SLU, Universität Oldenburg, Boston University, Stockholm School of Economics, University of Huddersfield, Ecole D’Economie de Paris y Università Degli Studi Di Milano.
Collaborating or sponsoring entities: European Investment Bank – Institute
Webpage of the project: http://c-bridge.ulpgc.es/index.html
Time period: January 2019 – December 2021.
Code: GAMS v.1 October 2019

Sponsors and partners

EIB Institute