*3.2.1. CGE method*

CGE analysis is being employed to explore the economic impacts of policy initiatives and frameworks and broader changes as environment-economy interactions, structural adjustment, technological change, labour market deregulation, financial market deregulation, taxation changes, macroeconomic reform and international capital interactions [19].

CGE methodology is based on interindustry transactions and business sectors and concept of multipliers but in addition attempts to forecast the impacts due to future economic conditions, prices, population variations [19]. CGE models can be described as a set of equations solved simultaneously to find prices at which quantity supplied equals quantity demanded (equilibrium) across all (general) markets. CGE models can broadly be distinguished according to their level of spatial detail (i.e., national, multiregional) or to time dimension (static versus dynamic) [21].

CGE models are valuable for analysing policies that affect different sectors in different ways. They can help capture the impacts of a policy on a factor (capital, labour and land), on commodity markets, on household types and on different regions. CGE models are also valuable for understanding the welfare and distributional impact of alternative policies. They are capable of capturing the indirect effects of a wide range of policy changes, and they represent a much more broad approach to estimating impacts, but the main disadvantage is that they predict consumer profiles and price fluctuation in the future with a high level of uncertainty [6].

#### *3.2.2. IO method*

IO analysis based on the concept of multipliers is an appropriate approach to evaluate how an economy may react to specific policies or external shocks or changes such an investment in a new transportation infrastructure project. Developed by Wassily Leontief in the 1930s, input-output method analyses the interdependence of industries within a given economy. Input-output analysis is based on a system of linear equations that describe the distribution of an industry's product throughout an economy [22].

More specific, IO method provides a complete picture of the flows of products and services in an economic system, illustrating the relationship between producers and consumers and the exchange of goods and services among economic sectors. In other words it illustrates all monetary market transactions between various businesses and also between businesses and final demand sectors as, for example, a new investment. Thus, they can be used to construct disaggregated multipliers in order to estimate apart from the direct impacts of a particular investment also its indirect impacts, induced impacts and catalytic impacts [23]. The conceptual framework of the IO method is depicted in **Figure 2**.

Mainly limitations of input-output analysis are lack of price effect, difficulties at the data collection or differences in defining and calculating each effect [24].

Applications of IO models have traditionally focused on the national level, but modifications to the method with specific local characteristics and regional economic development are also popular [25]. Rong and Yu Chang [26] investigated the role and influence of the transportation sector on the national economy of Taiwan using input-output analysis. In Ref. [22], an input-output inoperability model is used as a mechanism for analysing the induced effects caused by critical infrastructure dependencies and interdependencies.

**Figure 2.** IO model depiction (source: [14]).

The quantification of benefits as part of the previous analysis of the types of impact caused by air transport is calculated through economic impact analysis. Economic impact analysis traces the effects of expenditures of the air transport sector through the economy. An initial expenditure circulates through the economy and creates a chain reaction of additional expenditures [21].

Economic impact analyses usually are based on two different methods for analysing economic impact. The one is the input-output analysis (IO analysis), based on interindustry transactions and business sectors in order to quantify the response of the change in one business sector to another. Based on these data, multipliers are calculated in order to be used to estimate economic impact. An alternative methodology for conducting economic impact analyses is the Computable General Equilibrium (CGE) models. The fundamental difference is that in addition to what IO analysis does, CGE attempts to forecast the impacts due to future economic,

CGE analysis is being employed to explore the economic impacts of policy initiatives and frameworks and broader changes as environment-economy interactions, structural adjustment, technological change, labour market deregulation, financial market deregulation, taxa-

CGE methodology is based on interindustry transactions and business sectors and concept of multipliers but in addition attempts to forecast the impacts due to future economic conditions, prices, population variations [19]. CGE models can be described as a set of equations solved simultaneously to find prices at which quantity supplied equals quantity demanded (equilibrium) across all (general) markets. CGE models can broadly be distinguished according to their level of spatial detail (i.e., national, multiregional) or to time dimension (static

CGE models are valuable for analysing policies that affect different sectors in different ways. They can help capture the impacts of a policy on a factor (capital, labour and land), on commodity markets, on household types and on different regions. CGE models are also valuable for understanding the welfare and distributional impact of alternative policies. They are capable of capturing the indirect effects of a wide range of policy changes, and they represent a much more broad approach to estimating impacts, but the main disadvantage is that they predict consumer profiles and price fluctuation in the future with a high level of uncertainty [6].

IO analysis based on the concept of multipliers is an appropriate approach to evaluate how an economy may react to specific policies or external shocks or changes such an investment in a new transportation infrastructure project. Developed by Wassily Leontief in the 1930s, input-output method analyses the interdependence of industries within a given economy. Input-output analysis is based on a system of linear equations that describe the distribution

of an industry's product throughout an economy [22].

tion changes, macroeconomic reform and international capital interactions [19].

price, economic and population changes.

148 Mobilities, Tourism and Travel Behavior - Contexts and Boundaries

*3.2.1. CGE method*

versus dynamic) [21].

*3.2.2. IO method*
