# Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis

## Abstract

The state of the art approach to economic consequence analysis (ECA) is computable general equilibrium (CGE) modeling. However, such models contain thousands of equations and cannot readily be incorporated into computerized systems used by policy analysts to yield estimates of economic impacts of various types of transportation system failures due to natural hazards, human related attacks or technological accidents. This paper presents a reduced-form approach to simplify the analytical content of CGE models to make them more transparent and enhance their utilization potential. The reduced-form CGE analysis is conducted by first running simulations one hundred times, varying key parameters, such as magnitude of the initial shock, duration, location, remediation, and resilience, according to a Latin Hypercube sampling procedure. Statistical analysis is then applied to the “synthetic data” results in the form of both ordinary least squares and quantile regression. The analysis yields linear equations that are incorporated into a computerized system and utilized along with Monte Carlo simulation methods for propagating uncertainties in economic consequences. Although our demonstration and discussion focuses on aviation system disruptions caused by terrorist attacks, the approach can be applied to a broad range of threat scenarios.

- Authors:

- Publication Date:

- Research Org.:
- Pacific Northwest National Lab. (PNNL), Richland, WA (United States)

- Sponsoring Org.:
- USDOE

- OSTI Identifier:
- 1347836

- Report Number(s):
- PNNL-SA-115526

Journal ID: ISSN 0965-8564

- DOE Contract Number:
- AC05-76RL01830

- Resource Type:
- Journal Article

- Resource Relation:
- Journal Name: Transportation Research, Part A: Policy and Practice; Journal Volume: 95

- Country of Publication:
- United States

- Language:
- English

- Subject:
- Economic Consequence Analysis; Aviation System Disruptions; Reduced-Form; Computable General Equilibrium (CGE) Modeling; Latin Hypercube Sampling

### Citation Formats

```
Chen, Zhenhua, Rose, Adam Z., Prager, Fynnwin, and Chatterjee, Samrat.
```*Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis*. United States: N. p., 2017.
Web. doi:10.1016/j.tra.2016.09.027.

```
Chen, Zhenhua, Rose, Adam Z., Prager, Fynnwin, & Chatterjee, Samrat.
```*Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis*. United States. doi:10.1016/j.tra.2016.09.027.

```
Chen, Zhenhua, Rose, Adam Z., Prager, Fynnwin, and Chatterjee, Samrat. Sun .
"Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis". United States.
doi:10.1016/j.tra.2016.09.027.
```

```
@article{osti_1347836,
```

title = {Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis},

author = {Chen, Zhenhua and Rose, Adam Z. and Prager, Fynnwin and Chatterjee, Samrat},

abstractNote = {The state of the art approach to economic consequence analysis (ECA) is computable general equilibrium (CGE) modeling. However, such models contain thousands of equations and cannot readily be incorporated into computerized systems used by policy analysts to yield estimates of economic impacts of various types of transportation system failures due to natural hazards, human related attacks or technological accidents. This paper presents a reduced-form approach to simplify the analytical content of CGE models to make them more transparent and enhance their utilization potential. The reduced-form CGE analysis is conducted by first running simulations one hundred times, varying key parameters, such as magnitude of the initial shock, duration, location, remediation, and resilience, according to a Latin Hypercube sampling procedure. Statistical analysis is then applied to the “synthetic data” results in the form of both ordinary least squares and quantile regression. The analysis yields linear equations that are incorporated into a computerized system and utilized along with Monte Carlo simulation methods for propagating uncertainties in economic consequences. Although our demonstration and discussion focuses on aviation system disruptions caused by terrorist attacks, the approach can be applied to a broad range of threat scenarios.},

doi = {10.1016/j.tra.2016.09.027},

journal = {Transportation Research, Part A: Policy and Practice},

number = ,

volume = 95,

place = {United States},

year = {Sun Jan 01 00:00:00 EST 2017},

month = {Sun Jan 01 00:00:00 EST 2017}

}