1. Highways cost and regulation in Europe
“Economic Impact of Highway Investment and its Financing”

2. « Marginal » Investment
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3. « Structural » Investment
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4. Typology of equilibria
Competive Equilibrium (Walras, Pareto): prices clear all markets short and long-term
Short-term Equilibria with quantity rationing (Keynes)
Long-term equilibria (Smith, Ricardo, Marx)
Structuralist and other approaches leaving a role for effective demand
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5. Rationing approach
You can have several regimes, depending on the number of markets (typically 4, of which keynesian unemployment, classical unemployment and repressed inflation)
In each regime a different side of the market is rationed
Rationing in one market implies rationing in at least another market (=> quantity spillovers => macroeconomic multiplier)
Welfare analysis show that multipliers enter into shadow prices out of equilibrium, for instance 0.85 for wages
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6. Provisional Conclusion
In equilibrium: only look at consumption effects valued at market prices
Out of equilibrium: take macroeconomic effects into account through the multiplier, i.e. take into account quantity spillover effects
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7. What about TEN-T roads ?
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8. Anything on multipliers ?
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9. Financing aspects: Case 1
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10. Financing Aspects: Case 2
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11. Effects on the Government budget
Investment cost impacts 100% on both deficit and debt for the year if asset belongs to public sector
If asset belongs to private sector only the services provided during the year impact on both the deficit and the debt
With net worth accounting no impact of financing mode: effect should be equal to present value of the stream of cash flows belonging to each sector
Issue is between private and public debt. Choice should depend on desired public road stock
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12. Net value of EU road stock?
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13. Conclusions TEN-T has macroeconomic relevance
Out of equilibrium its macroeconomic multiplier effects should also be taken into account
These are likely to be high because effect similar to a coordinated fiscal policy shock
If the purpose of TEN-T is macroeconomic, better be careful with PPPs and related, especially in NMS
Public sector financing should be admissible
Otherwise other forms of active macroeconomic coordination should be sought
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