Template-type: ReDIF-Paper 1.0 Title: Estimates of the Elasticity of Substitution Between Imported and Domestically Produced Commodities at the Four Digit ASIC Level Author-Name: Chris M. Alaouze Author-X-Name-First: Chris M. Author-X-Name-Last: Alaouze Author-Name: John S. Marsden Author-X-Name-First: John S. Author-X-Name-Last: Marsden Author-Name: John Zeitsch Author-X-Name-First: John Author-X-Name-Last: Zeitsch Abstract: This paper contains estimates made in 1977 of the elasticity of substitution between domestically produced and imported commodities at the four digit level of the Australian ASIC commodity classification then in use. The data upon which the estimates were based included series specially constructed for the Industries Assistance Commission from customs clearance records covering the period 1968-69 through 1974-75. Because this period contained a substantial movement in the real exchange rate for the Australian dollar, relatively large movements occur in the relative prices in Australia of the domestically produced and the competing imported commodities. Thus the sample period and data augured well for the estimation of Armington substitution elasticities, which was relatively successful. Note, however, that the data were not rich enough to obtain separate estimates for different sources of imports, nor for different intermediate and final uses of the commodities. The estimates served well, however, in the implementation of the ORANI model used in debate and policy formation in Australia during the 1980s. The four-digit ASIC data base used in this study was published in 1985 as Chris M. Alaouze (1985), "The Impact Trade Flow Data Base", Impact Project Working Paper No. I-24, Melbourne. This paper will be available on this web site in the reasonably near future. This data base also includes pressure of demand series for eight industry groups. These were included as regressors and found significant in the equations used to estimate the Armington elasticities for several commodities. (This abstract written in 2004 by Chris Alaouze and Alan Powell) Classification-JEL: C13, C14, D12 Creation-Date: 1977-07 File-URL: https://www.copsmodels.com/ftp/workpapr/o-11.pdf File-Format: Application/pdf File-Function: Initial version, 1977-07 File-URL: https://www.copsmodels.com/elecpapr/o-11.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:o-11 Template-type: ReDIF-Paper 1.0 Title: Stimulation of Employment in Neo-Classical Models Author-Name: Michael Malakellis Author-X-Name-First: Michael Author-X-Name-Last: Malakellis Author-Name: Matthew Peter Author-X-Name-First: Matthew Author-X-Name-Last: Peter Abstract: This paper explores the possibility of a Keynesian-like employment response in multi-sectoral neo-classical models such as the ORANI model of the Australian economy. One of the more controversial applications of ORANI has been its use in designing a macroeconomic policy package which stimulates employment without worsening the external account. This package involves restraining real wages while simultaneously increasing aggregate demand. As expected of a model with a neo-classical structure, real wage restraint boosts employment in ORANI. However, employment responds positively to an expansion in aggregate demand -- a result expected of a Keynesian rather than a neo-classical model. The conclusion is that relative price movements and compositional effects, which are entirely consistent with a neo-classical structure, explain the positive relationship between employment growth and aggregate demand in ORANI and kindred models.) Classification-JEL: C68, E24 Creation-Date: 1991-03 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-49.pdf File-Format: Application/pdf File-Function: Initial version, 1991-03 File-URL: https://www.copsmodels.com/elecpapr/ip-49.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-49 Template-type: ReDIF-Paper 1.0 Title: The Mathematical Programming Approach to Applied General Equilibrium Modelling: Notes and Problems Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: The mathematical programming approach to applied general equilibrium analysis, although no longer the dominant tool, is still useful, from at least two points of view: (1) it neatly integrates into an economy-wide framework the microeconomic theory of the behaviour of agents constrained by inequalities; and (2) it provides a useful approach for computing the solutions of some general equilibrium problems not solvable with the current GEMPACK software (see, e.g., Dixon (1991), cited below on p. 16). The material contained in this paper was meant to be included in our graduate-level text (Peter B. DIXON, B.R. PARMENTER, Alan A. POWELL and P.J. WILCOXEN, Notes and Problems in Applied General Equilibrium Economics (Amsterdam: North-Holland, 1992), but space limitations led to our reluctant exclusion of it from the text. Publication in the Impact series will mean that those who find the approach in our textbook useful will be able to apply the same method towards mastering mathematical programming in a general equilibrium context. Classification-JEL: C68, C61 Creation-Date: 1991-04 File-URL: https://www.copsmodels.com/ftp/workpapr/i-50.pdf File-Format: Application/pdf File-Function: Initial version, 1991-04 File-URL: https://www.copsmodels.com/elecpapr/i-50.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:i-50 Template-type: ReDIF-Paper 1.0 Title: Solving Nonlinear Economic Models Accurately Via a Linear Representation Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: This paper focuses on one way a linearized representation of a nonlinear economic model can be used to obtain arbitrarily accurate solutions to simulations. The key is a method for translating a simulation problem directly to a so-called initial value problem. Since many different methods for solving initial value problems are known and well understood, and since each one converts to an algorithm for solving simulation problems, this insight greatly expands the computational tool kit for conducting simulations. This paper contains a survey of the theoretical results guaranteeing convergence and forming the basis for extrapolations of two important methods for solving initial value problems. Theoretical considerations suggest that the faster rate of convergence of one of these methods (the modified midpoint method) is likely to cause it to dominate the other (Euler's method) in many situations faced by applied general equilibrium modellers. The other main points of the paper are: (a) to emphasize that linearized (symbolic) representations of models lead naturally to efficient algorithms which can be used to compute solutions having any desired degree of precision; and (b) to suggest that such accurate methods (rather than Johansen's method) should be the default when solving models (especially applied general equilibrium models) represented in linearized form. Classification-JEL: C63, C68 Creation-Date: 1991-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-55.pdf File-Format: Application/pdf File-Function: Initial version, 1991-07 File-URL: https://www.copsmodels.com/elecpapr/ip-55.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-55 Template-type: ReDIF-Paper 1.0 Title: Using the Murphy Model to Provide Short-Run Macroeconomic Closure for ORANI Author-Name: James H. Breece Author-X-Name-First: James H. Author-X-Name-Last: Breece Author-Name: Keith R. McLaren Author-X-Name-First: Keith R. Author-X-Name-Last: McLaren Author-Name: Chris W. Murphy Author-X-Name-First: Chris W. Author-X-Name-Last: Murphy Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: A macro model incorporating rational expectations in financial markets (the Murphy Model - MM) is used to endogenize the macroeconomic environment for a comprehensive general equilibrium model (ORANI). The interface exploits the existence of variables which are endogenous to both models, calibrating on a shock to government spending, which is the principal common exogeneity. The responses of the half-dozen doubly endogenous variables feature prominently in the calibration procedure, which minimizes any conflict between the stories told about these variables by the two models. Prospective benefits include: (1) to the numerous policy-oriented users of ORANI, a facility allowing the macroeconomic environment to be determined by a macrodynamic model such as MM; (2) to these users, reassurance that ORANI's short-run translates in calendar time to about two years; (3) to the clientele of a macro model, the possibility of much more detailed projections.. Classification-JEL: C68, E17 Creation-Date: 1991-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-56.pdf File-Format: Application/pdf File-Function: Initial version, 1991-07 File-URL: https://www.copsmodels.com/elecpapr/ip-56.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-56 Template-type: ReDIF-Paper 1.0 Title: Sato's Insight on the Relationship between the Frisch 'Parameter' and the Average Elasticity of Substitution Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: This short note demonstrates that Sato's 1972 insight concerning the equivalence between Frisch's 'money flexibility' parameter and the average elasticity of substitution among commodities needs to be modified if it is to be applied to non-homothetic utility functions. Fortunately the modification is easily implemented. Classification-JEL: D12 Creation-Date: 1992-01 File-URL: https://www.copsmodels.com/ftp/workpapr/g-99.pdf File-Format: Application/pdf File-Function: Initial version, 1992-01 File-URL: https://www.copsmodels.com/elecpapr/g-99.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-99 Template-type: ReDIF-Paper 1.0 Title: The Contribution of Applied General Equilibrium Analysis to Policy Reform in Australia Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Author-Name: Richard H. Snape Author-X-Name-First: Richard H. Author-X-Name-Last: Snape Abstract: Applied general equilibrium (GE) modelling is widely used by Australian federal government agencies involved in policy making. With the possible exception of Norway, this situation seems to be unique to Australia. The present paper traces the history of the IMPACT Project, an initiative of the Australian Industry (formerly Industries Assistance) Commission in association with a number of Australian universities, which has been instrumental in securing the widespread acceptance of the GE method in applied policy economics. We note, inter alia, that the largest loser from Australia's manufacturing protectionism, namely her export-oriented farm sector, has adopted the GE approach in pressing its case to government. We ask the question: 'To what extent has applied GE modelling been influential in achieving the turn around in Australia's stance to commercial policy?' We present the relevant evidence in abbreviated form, but leave the answer to the reader. Classification-JEL: D58 Creation-Date: 1992-01 File-URL: https://www.copsmodels.com/ftp/workpapr/g-98.pdf File-Format: Application/pdf File-Function: Initial version, 1992-01 File-URL: https://www.copsmodels.com/elecpapr/g-98.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-98 Template-type: ReDIF-Paper 1.0 Title: Flexibly Nested Production Functions: Implementation for MONASH Author-Name: R.A. McDougall Author-X-Name-First: R.A. Author-X-Name-Last: McDougall Abstract: This paper describes the implementation for the MONASH model of a scheme for flexible nesting of production functions. The scheme supports substitution in production between different commodities and between commodities and primary factors, which the standard ORANI production system does not. Thus it supports more flexible functional forms than standard ORANI. More importantly, this treatment supports not just a single functional form but a wide variety of functional forms, built up by the nesting of CES aggregator functions. The number of CES aggregator functions, their membership, and the depth of nesting are all arbitrary. These features of the nesting structure are now specified not in the theoretical structure in the database. Thus the production structure can readily be modified to meet the special requirements of individual applications. We illustrate the use of the flexible nesting treatment with an application to inter-fuel and energy-capital substitution. Classification-JEL: C68, D24 Creation-Date: 1992-06 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-57.pdf File-Format: Application/pdf File-Function: Initial version, 1992-06 File-URL: https://www.copsmodels.com/elecpapr/ip-57.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-57 Template-type: ReDIF-Paper 1.0 Title: An Implicitly Directly Additive Demand System: Estimates for Australia Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: The problem of endowing large applied general equilibrium models with numerical values for parameters is formidable. For example, a complete set of own- and cross-price elasticities of demand for the ORANI model involves 228 squared, or about 60 K items. Invoking the minimal assumptions that demand is generated by utility maximization reduces the load to about 26 K -- obviously still a number much too large for unrestrained econometric estimation. To obtain demand systems estimates for a dozen or so generic commodities at a top level of aggregation (categories like 'food', 'clothing and footwear', ...), typically Johansen's (1960) lead has been followed, and directly additive preferences imposed upon the underlying utility function. With the move beyond one-step linearized solutions of the ORANI model, the functional form of the demand system adopted becomes an issue. The most celebrated of the additive-preference demand systems, Stone's (1954) linear expenditure system (LES), has one drawback for empirical work; namely, the constancy of marginal budget shares (MBSs) -- a liability shared with the Rotterdam system (Barten, 1964, 1968; Theil, 1965, 1967). To get around this, Theil and Clements (1987) used Holbrook Working's (1943) Engel specification in conjunction with additive preferences; unfortunately both Working's formulation and Deaton and Muellbauer's (1980) AIDS have the problem that, under large changes in real incomes, budget shares can stray outside the [0,1] interval. It was such behaviour that led Cooper and McLaren (1987, 1988, 1991, forthcoming 1992) to invent MAIDS, a system with better regularity properties. MAIDS, however, is not globally compatible with any additive preference system. In this paper we specify, and estimate, at the six-commodity level, an implicitly directly additive-preference demand system which allows MBSs to vary as a function of total real expenditure and which is globally regular throughout that part of the the price-expenditure space in which the consumer is at least affluent enough to meet subsistence requirements. Classification-JEL: D12, C68 Creation-Date: 1992-10 File-URL: https://www.copsmodels.com/ftp/workpapr/op-73.pdf File-Format: Application/pdf File-Function: Initial version, 1992-10 File-URL: https://www.copsmodels.com/elecpapr/op-73.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-73 Template-type: ReDIF-Paper 1.0 Title: Demand Patterns Across the Development Spectrum: Estimates for the AIDADS System Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: This is a companion paper to Impact Preliminary Working Paper No OP-73 in which Rimmer and Powell report on a new implicitly directly additive demand system (AIDADS) which (in Cooper and McLaren's 1992b terminology) is effectively globally regular. In OP-73 AIDADS is fitted to a six-commodity disaggregation of a 35-year Australian time series of consumption. Unlike the linear expenditure system and the Rotterdam model, the new system allows marginal budget shares to vary as a function of income. In the current paper we also work at a six-commodity level, fitting AIDADS to an international cross section of 30 countries in 1975. The data are from the International Comparisons Project of Kravis, Heston and Summers (1982) and previously were analyzed by Theil and Clements (1987) using a combination of additive preferences and Working's (1943) model in differential form. The present results overcome two potential shortcomings of the earlier work by replacing Working's model with a more regular specification of Engel effects and by providing and estimating an explicit functional form in the levels of the variables. A rough comparison can be made between the time-series estimates of OP-73 and the cross-sectional ones reported here. We found the two sets of results broadly consistent (although the rate of decline in Food's marginal budget share was less in the Australian time series than in the international cross section). Overall, the new system performed well empirically. It seems suitable for modelling demand for broad consumption aggregates (say up to about a dozen commodities) in situations in which there may be very large variations in income per head. Classification-JEL: D12, C68 Creation-Date: 1992-10 File-URL: https://www.copsmodels.com/ftp/workpapr/op-75.pdf File-Format: Application/pdf File-Function: Initial version, 1992-10 File-URL: https://www.copsmodels.com/elecpapr/op-75.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-75 Template-type: ReDIF-Paper 1.0 Title: Two Short Papers Detailing Enhancements to FH-ORANI Author-Name: R.A. McDougall Author-X-Name-First: R.A. Author-X-Name-Last: McDougall Abstract: This document contains two short papers on the theoretical structure of FH-ORANI. The first paper is concerned with local ownership shares for fixed capital in individual industries. The second is concerned with the taxation of earnings of fixed capital. Each paper identifies shortcomings in the current treatment, proposes a new treatment, describes its computer implementation, and presents illustrative simulation results. The first paper proposes two changes relating to local ownership of fixed capital. * In calculating industry shares in aggregate capital stocks, we assume uniformity across industries not in pre-tax rates of return, but in post-tax rates. * In determining local ownership shares for individual industries, we do not assume changes in shares to be uniform across industries, but do require them to be jointly consistent with the change in the economy-wide average local ownership share. Illustrative simulation results show that the new treatment greatly increases the sensitivity of foreign income payments to changes in the economy-wide local ownership share. The second paper proposes several changes relating to taxation of earnings of fixed capital. * Tax reductions arising from depreciation and investment allowances are not apportioned between fixed capital, working capital, and land, but are allocated entirely to fixed capital. * The share of tax on earnings of fixed capital in total tax on non-labour income is not fixed, but varies in response to changes in the composition of non-labour income. * Investors treat the reduction in tax arising from the investment allowance not as an augmentation to their income, but as a partial offset to the purchase cost of capital. Illustrative simulation results show that the new treatment greatly increases the sensitivity of capital usage to changes in the depreciation and investment allowance. Classification-JEL: C68, D33 Creation-Date: 1992-12 File-URL: https://www.copsmodels.com/ftp/workpapr/op-71.pdf File-Format: Application/pdf File-Function: Initial version, 1992-12 File-URL: https://www.copsmodels.com/elecpapr/op-71.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-71 Template-type: ReDIF-Paper 1.0 Title: Short-Run Effects of A Carbon Tax Author-Name: R.A. McDougall Author-X-Name-First: R.A. Author-X-Name-Last: McDougall Abstract: This paper presents estimates of short-run sectoral and economy-wide effects of the introduction of a carbon tax in Australia. The results are derived using an enhanced version of the ORANI multi-sectoral model of the Australian economy. We simulate the introduction of a carbon tax at a rate of 1991-92 $25 per tonne, designed to achieve the Toronto target of a 20 per cent reduction in carbon dioxide emissions below the 1988 level by 2005. We find that the macroeconomic impact would depend critically on the extent to which price rises flowed through into wage rates. Assuming fixed money wages, real GDP would be decreased by an estimated 0.9 per cent, and employment by 1.2 per cent. To maintain a given employment level in the face of the carbon tax would require a reduction in the foreign-currency-equivalent wage rate estimated at 2.8 per cent. This would also entail a decrease in the real wage rate (defined with respect to the consumption price deflator) of 2.8 per cent. Government could promote lower wage outcomes by returning the carbon tax revenue to the community through reductions in other taxes. Enhancements to ORANI used in this simulation include disaggregation of the fossil fuel sector and provision for carbon taxation. Classification-JEL: C68, Q53, Q57 Creation-Date: 1993-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-100.pdf File-Format: Application/pdf File-Function: Initial version, 1993-06 File-URL: https://www.copsmodels.com/elecpapr/g-100.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-100 Template-type: ReDIF-Paper 1.0 Title: Some Short-Run Implications of Fightback: A General Equilibrium Analysis Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Abstract: We report ORANI projections of the short-run effects on the macroeconomy and the industrial structure of the main elements of the Fightback proposals, namely the proposed abolition of the wholesale sales tax, petroleum excise and the payroll tax, proposed cuts in income taxes and government outlays, and the proposed introduction of the goods and services tax. In making the projections, we assume (with Fightback) that nominal wage rates are unaffected. We also assume that private domestic aggregate demand moves in line with changes in disposable income. These fiscal changes fall into two main groups changes in indirect taxes which affect relative prices directly, and changes to income tax rates and government outlays which have their direct impacts on the level and commodity composition of domestic demand. Analysis of the second group is relatively straightforward. Cuts in income taxes increase private-sector demand, crowding out exports but generating a net increase in output and employment. Cuts in government outlays reduce public and private demand, allowing exports to expand but generating a net contraction of output and employment. Because public demand is concentrated on labour-intensive commodities, the contractionary employment effect of cuts in outlays is greater, per dollar of change, than is the expansionary effect of the income tax cuts. Differences in the macroeconomic effects of the indirect-tax components of the package depend on: (a) differences between the taxes in the effects of imposing a dollar's worth of tax on any given industry; (b) differences in the industrial incidences of the taxes; and (c) differences in the sizes of the tax changes. The payroll tax affects the cost of employing labour directly. It therefore has a greater effect in any given industry on employment per dollar of tax change than does the wholesale sales tax, the petroleum excise or the goods and services tax. The GST does not discriminate between imports and domestic commodities and affects exports in only a minor indirect way. Hence, its impact on cost-sensitive industries exposed to international competition is smaller than the impacts of the other taxes, especially the payroll tax. Hence, the implications of the GST for output and employment are relatively small. Our translation of proposals from the Fightback document into shocks for our model is not without some difficulties. The appropriate size of the income tax cuts is one especially controversial issue. We present sufficient information in the paper to allow the reader to perform some sensitivity analysis. For example, to see the effects of assuming that income tax cuts are worth $10billion rather than the $13billion which we impose, the income tax columns in our tables should be scaled down by a factor of 10/13. Substitution of the goods and services tax for the wholesale sales tax, petroleum excise and the payroll tax is a major feature of the Fightback package. Because employment is less sensitive to the cost effects of the goods and services tax than it is to those of the taxes which are replaced, our major conclusion is that the package would generate increases in employment and GDP in the short run. However, our projections also imply that, without adjustments to nominal wage rates, the package would lead to a reduction in the real value of the take-home wage rate. When nominal wage rates are adjusted to maintain the real value of disposable income per unit of employment, the expansionary effects of the package on employment and the GDP are substantially reduced, but not entirely eliminated. Classification-JEL: C68, E62 Creation-Date: 1993-07 File-URL: https://www.copsmodels.com/ftp/workpapr/g-101.pdf File-Format: Application/pdf File-Function: Initial version, 1993-07 File-URL: https://www.copsmodels.com/elecpapr/g-101.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-101 Template-type: ReDIF-Paper 1.0 Title: Import Price and Activity Elasticities for the MONASH Model: Johansen FIML Estimation of Cointegration Vectors Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: This study investigates the relationship between manufactured import flows to Australia and relative prices and domestic economic activity over the period 1981Q3 to 1992Q2. This is done through the estimation of import demand functions for total manufactured imports and 29 import product categories defined at the 2-digit level of the AICC by employing the Johansen FIML procedure. The price and activity elasticities will form part of the elasticity files of the MONASH Model, currently being developed at the Centre of Policy Studies. The price elasticities range from 0.24 to 1.75, with a weighted-average of 0.60. We also find evidence of upward bias in price elasticity estimates when an aggregate import function is employed in a context where variation in prices of individual products are negatively correlated with their price elasticities, and when a significant portion of imports are subject to quantitative restrictions (QRs). The unit activity elasticity hypothesis was accepted for one third of our sample. The majority of activity elasticities are greater than one, and usually closer to two. Classification-JEL: C68, C22 Creation-Date: 1993-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-58.pdf File-Format: Application/pdf File-Function: Initial version, 1993-07 File-URL: https://www.copsmodels.com/elecpapr/ip-58.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-58 Template-type: ReDIF-Paper 1.0 Title: Exchange Rate Pass-Through for Australian Manufactured Imports: Estimates from the Johansen Maximum-Likelihood Procedure Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: This paper estimates exchange rate pass-through for Australian manufactured imports by applying an econometric procedure which avoids the pit-falls in previous studies to a carefully assembled data set. For the first time, we provide estimates of pass-through based on the Johansen (1988) ML procedure. Our finding of incomplete pass-through has important implications for policy and the macroeconomy. Incomplete pass-through brings into question the validity of the "small" country assumption and the exogeneity of the terms of trade with respect to exchange rate changes. We may also have to reconsider the extent of the apparent inflationary (deflationary) consequences of exchange rate depreciations (appreciations), and the effects of exchange rate variability on international trade flows. Classification-JEL: F31 Creation-Date: 1993-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-60.pdf File-Format: Application/pdf File-Function: Initial version, 1993-07 File-URL: https://www.copsmodels.com/elecpapr/ip-60.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-60 Template-type: ReDIF-Paper 1.0 Title: Integrating Econometric and Environmetric Modelling Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: This paper is organized around brief accounts of two modelling initiatives, one with an Australian and the other with a global focus, which have contributed to the policy debate about greenhouse gas abatement. The Australian study involved the combined use of an energy technology programming model, MENSA/MARKAL, with an applied general equilibrium model of the Australian economy, ORANI-F. This interfaced suite of models was used to inform the Australian government's consultations on environmentally sustainable development. The second study involves the Global 2100 model, which also uses a mathematical programming model of energy technology, but couples it to a macro, rather than an applied general equilibrium model. The latter study is one of several, each based on a different model, used as an input to OECD deliberations on greenhouse. After giving brief accounts of the interfaces between the environmetric and economic component modules of ORANI-F\MENSA/MARKAL and of Global 2100 and a synopsis of what insights into global warming have come out of these models, I set out my ideas about how better interfaces between econometric and environmetric models can be achieved. These suggestions relate more to the 'culture' of modelling than to technicalities. It seems that the technical (often model-specific) problems encountered at the interfaces will be more tractable if everyone involved adopts the same computer modelling language and standards of documentation. Modellers from both sides will have to discipline themselves to keep their component models down to a size that allows the interfaced system to be solved using computer resources that are routinely available. Classification-JEL: C68, Q57 Creation-Date: 1993-11 File-URL: https://www.copsmodels.com/ftp/workpapr/g-102.pdf File-Format: Application/pdf File-Function: Initial version, 1993-11 File-URL: https://www.copsmodels.com/elecpapr/g-102.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-102 Template-type: ReDIF-Paper 1.0 Title: The International Comparison Project as a Source of Private Consumption Data for a Global Input-Output Model Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: In 1989 a major project entitled "Strategies for Environmentally Sound Economic Decelopment" was inaugurated under the sponsorship of the United Nations. This project is designed to identify ways of alleviating pressures on the global environment and, at the same time, raise the standard of living of the poorest countries. The central component of its analytical framework is a dynamic global input-output model (GIOM) that describes trade between 15 regions in about 50 commodities, taking as its starting point the well known 1977 World Input-Output Model of Leontief, Carter and Petri. The purpose of the present paper is twofold. Firstly, it describes a contribution to the compilation of a database for the GIOM. In particular, it draws on data collected by the United Nations' International Comparison Project (ICP) to provide estimates of private consumption expenditure for 1980, the base period for the model. Secondly, it uses these estimates as a case study to examine the implications of using different price systems for each country, rather than a common set of prices, to determine expenditures on composite commodities. In preparing data for multisectoral global models, it is common practice to collect expenditure data evaluated in local (national) prices and convert to world prices using published exchange rates. The analysis of this paper suggests that, when commodities produced in different countries are treated as perfect substitutes in the model, the practice may seriously compromise the model's results. Classification-JEL: C67, C81, F10, O21 Creation-Date: 1993-12 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-62.pdf File-Format: Application/pdf File-Function: Initial version, 1993-12 File-URL: https://www.copsmodels.com/elecpapr/ip-62.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-62 Template-type: ReDIF-Paper 1.0 Title: Water Pricing and investment in Melbourne: General Equilibrium Analysis with Uncertain Stream Flow Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: We describe the theory, computation and results of a multiperiod general equilibrium model designed to assist an urban water authority in its pricing and investment decisions. The model includes gestation periods in the creation of dams, main sewers and treatment plants. It allows for lumpy capital items and recognizes cost differences in the provision of services in peak and non-peak times. Its general equilibrium framework is convenient for handling links between the water authority and the rest of the economy, especially the housing sector. We have used two computational approaches. In the first, we reformulate the model as a single-entity optimization problem and then apply a linear programming package. We have found that a better approach is to apply Newton-Raphson methods to a formulation of the model as a set of equations depicting purely competitive behaviour in all productive activities. A special feature of this paper is an integration of the model's results, obtained under the assumption of certainty, with data on weather-induced variations in streamflow and demand. Using Monte Carlo techniques we assess the risks of water shortages associated with the investment and pricing strategies that our model indicates. Classification-JEL: C68, Q25 Creation-Date: 1993-12 Keywords: water pricing and investment, uncertain streamflow, water policy in a general equilibrium model, water policy for Melbourne, linear programming, Newton-Raphson, Monte Carlo, peak and non-peak File-URL: https://www.copsmodels.com/ftp/workpapr/ip-63.pdf File-Format: Application/pdf File-Function: Initial version, 1993-12 File-URL: https://www.copsmodels.com/elecpapr/ip-63.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-63 Template-type: ReDIF-Paper 1.0 Title: The Use of the ORANI Model in the Immigration Debate Author-Name: Matthew W. Peter Author-X-Name-First: Matthew W. Author-X-Name-Last: Peter Abstract: This paper presents the theoretical specification of the MONASH-MRF model. MONASH-MRF is a multiregional multisectoral model of the Australian economy. Included is a complete documentation of the model's equations, variables and coefficients. The documentation is designed to allow the reader to cross-reference the equation system presented in this paper in ordinary algebra, with the computer implementation of the model in the TABLO language presented in CoPS/IMPACT Preliminary Working Paper No. OP-82. Classification-JEL: C68, D58, R10, R13 Creation-Date: 1993-12 Keywords: multiregional, regional modelling, CGE, regional and Federal government finances File-URL: https://www.copsmodels.com/ftp/workpapr/g-103.pdf File-Format: Application/pdf File-Function: Initial version, 1993-12 File-URL: https://www.copsmodels.com/elecpapr/g-103.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-103 Template-type: ReDIF-Paper 1.0 Title: Energy Taxes and Greenhouse Gas Emissions in Australia Author-Name: R.A. McDougall Author-X-Name-First: R.A. Author-X-Name-Last: McDougall Abstract: A feature of recent policy discussion both in Australia and overseas has been a heightened interest in energy taxes and fuel taxes of various kinds. These taxes have been advocated on various grounds, notably their role in discouraging greenhouse gas emissions. At the same time, at least in Australia, greenhouse policy discussion has been redirected more towards small-scale sector-specific interventions, and away from economy-wide measures such as a carbon tax. In this context it becomes of interest to ask, how effective might an energy tax be in reducing carbon emissions? Here we use the term energy tax to mean fossil fuel taxes excluding carbon taxes. A carbon tax is levied on carbon dioxide emissions or some closely related basis, while an energy tax is levied on some other basis such as energy content. The paper presents simulation results designed to address these questions. The simulations are performed using the ORANI model of the Australian economy, in a version containing several energy-specific enhancements. These include greater detail on energy production and use in the database, and a wider range of substitution possibilities in energy production and use in the theoretical structure. The database enhancements include extensive disaggregation of the two largest parts of the energy sector, fossil fuels and electricity. The theoretical developments cover substitution between energy and capital, between different sources of energy, between different techniques of generating electricity, and between different modes of transport. We find that a broad-based energy tax would be comparable in effectiveness to a carbon tax in reducing greenhouse gas emissions. This is because like the carbon tax it would bear heavily on the cheaper fossil fuels and would induce emission abatement through fuel switching. Taxes such as a petroleum products tax which excluded the cheaper fossil fuels would be much less effective. Classification-JEL: C68, Q57 Creation-Date: 1993-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-104.pdf File-Format: Application/pdf File-Function: Initial version, 1993-12 File-URL: https://www.copsmodels.com/elecpapr/g-104.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-104 Template-type: ReDIF-Paper 1.0 Title: Trade Liberalization and Intra-Industry Specialization: The Australian Experience Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: Much of the growth in trade among the industrialised countries, and more recently among countries in the Asia-Pacific region, has taken the form of intra-industry trade (IIT). Australia has historically had one of the lowest shares of IIT among OECD countries. This paper examines how Australia's IIT has changed in the 1980s in response to the process of trade liberalisation and completion of the CER pact with New Zealand. Towards this end, IIT indexes are estimated for Australia's multilateral and trans-Tasman trade for 1981 and 1991 for 132 industries using data at the 3 and 4-digit level of the SITC. The results point to a sharp increase in the share of IIT for both multilateral and trans-Tasman trade. We also find that the industries that had undergone the largest reductions in protection levels had also increased their shares of IIT quite considerably. These findings suggest that the short to medium run adjustment costs associated with trade liberalisation are likely to be lower than expected as a result of increased intra-industry specialisation. If IIT continues to grow in response to the on-going process of internationalisation of the Australian economy, then Australia's prospects for expanding its share in world trade, and particularly in the Asia-Pacific region, are likely to be significantly boosted. Classification-JEL: D58, F14 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-107.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/g-107.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-107 Template-type: ReDIF-Paper 1.0 Title: Flexible Exchange Rates and Traded Goods Prices: A Theory of the Short-Run Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: The volatility displayed by floating exchange rates has revived interest in the relationship between exchange rates and traded goods prices. This paper aims to provide a theory of exchange rates and traded goods prices in the short-run. In particular, it examines how various factors can cause exchange rate pass-through to be incomplete in the short-run but not in the long-run. These include: (i) menu costs, (ii) the costs of changing supply, (iii) the dynamics of demand response to price changes, (iv) order-delivery lags, (v) forward exchange cover, and (vi) the currency denomination of trade contracts. From a policy perspective, the presence of these factors could account for the often prolonged adjustment of trade balances to exchange rate changes, and the failure of exchange rate volatility to perceptibly affect the volume of international trade flows. Classification-JEL: D58, F14 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-108.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/g-108.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-108 Template-type: ReDIF-Paper 1.0 Title: How Important is Intra-Industry Trade in Australia's Rapid Trade Growth? Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: Empirical work on intra-industry trade (IIT) is almost 30 years old. Initial research sought to identify if IIT was a significant share of total trade (TT). The Grubel-Lloyd (GL) index was widely used for this purpose, since it provides a relatively reliable measure of the importance of IIT at any point in time. Interest has since shifted to the changing importance of IIT over time, particularly with the emergence of regional trading blocks. Previous researchers have used movements in the GL index to infer the importance of IIT over time. This is not only vague, but can be misleading. In this paper, we show how to measure the contributions of net trade (NT) and IIT to the growth in TT. To understand changes in IIT over time, we also derive the contributions of imports and exports to the growth in TT, NT and IIT. All our formulas are illustrated with data for 205 Australian manufacturing industries defined at the 3- and 4-digit level of the SITC for the periods 1981 to 1986 and 1986 to 1991. The results show that while almost all the growth in TT was driven by NT between 1981 and 1986, IIT contributes almost half the sharp growth in TT between 1986 and 1991. The dominant contribution of NT between 1981 and 1986 was mainly a result of import growth, while the increase in the contribution of IIT between 1986 and 1991 was almost solely due to export growth. Classification-JEL: F31, F32 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-110.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/g-110.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Dixon, Menon and Rimmer(2000), 'Changes in Technology and Preferences: A General Equilibrium Explanation of Rapid Growth in Trade', Australian Economic Papers, Wiley Blackwell, vol. 39(1), pages 33-55, March. Handle: RePEc:cop:wpaper:g-110 Template-type: ReDIF-Paper 1.0 Title: Engel Flexibility in Household Budget Studies: Non-parametric Evidence versus Standard Functional Forms Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: At least since the mid-1970s, the emphasis in applied demand analysis has been on a flexible specification of substitution effects. Recent theoretical work by Cooper and McLaren (1992a, 1992b and 1996) and Cooper, McLaren and Parameswaran (1994) has put more emphasis on effectively globally regular systems which allow greater flexibility in the treatment of Engel effects. However, current empirical work continues to use a relatively inflexible treatment of Engel effects. Following Lewbel's (1991) lead, in the present paper we attempt to evaluate the need for a more flexible treatment by examining Engel effects in the Australian Household Expenditure Survey for 1988-89 from an agnostic position in which the form of the Engel response is entirely data-determined. We do this using non-parametric procedures in the statistical package S-Plus. Contrary to common practice (and confirming Lewbel's empirical results for U.K. and U.S. data), we find evidence of non-monotonic responses of budget shares with increasing income. This argues in favour of more flexible forms for Engel curves such as those explored in recent work by Cooper and McLaren (1996) and by Rimmer and Powell (1992a, 1992b and 1996). Using the same methodology, we also carry out a brief exploration of the influence of demographic effects on household Engel responses. Classification-JEL: C13, C14, D12 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/op-79.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/op-79.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-79 Template-type: ReDIF-Paper 1.0 Title: Applied General Equilibrium Modelling: Achievement, Failure and Potential Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: Over the last twenty years, applied general equilibrium models (AGEMs) have provided useful insights on the likely effects of disturbances in one part of the economy on activity in other parts; e.g. the effects of changes in manufacturing protection on exports of mineral products. On the other hand, AGEM-based analyses of the welfare effects of proposed policy changes have been unconvincing. Nor have forecasts derived from AGE models provided satisfactory guidance to people concerned with investment and other business decisions. This paper explains these views and discusses the research required to move AGE modelling closer to its full potential. Classification-JEL: C68, D58 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-106.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/g-106.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-106 Template-type: ReDIF-Paper 1.0 Title: The Macroeconomic, Industrial, Distributional and Regional Effects of Government Spending Programs in South Africa Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Author-Name: Martin Cameron Author-X-Name-First: Martin Author-X-Name-Last: Cameron Author-Name: Riaan Joubert Author-X-Name-First: Riaan Author-X-Name-Last: Joubert Author-Name: Areef Suleman Author-X-Name-First: Areef Author-X-Name-Last: Suleman Author-Name: Dawie de Jongh Author-X-Name-First: Dawie de Author-X-Name-Last: Jongh Abstract: A computable general equilibrium model of the South African economy (IDC-GEM) is outlined. The model is used to analyse the effects on the economy of increases in government spending such as are at the core of the new government's Reconstruction and Development Program. The analysis concentrates on the implications of alternative methods of finance for the program. Results are reported for macroeconomic variables, for the prospects of industries and regions, and for income distribution. Classification-JEL: C68, D31, E62, O55, R13 Creation-Date: 1995-04 Keywords: economic modelling, South Africa, government spending, income distribution, industrial effects, regional effects, macroeconomic effects File-URL: https://www.copsmodels.com/ftp/workpapr/g-109.pdf File-Format: Application/pdf File-Function: Initial version, 1995-04 File-URL: https://www.copsmodels.com/elecpapr/g-109.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-109 Template-type: ReDIF-Paper 1.0 Title: Regional Trading Arrangements and Intra-Industry Trade: The Case of ANZCERTA Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: Empirical work on intra-industry trade (IIT) is almost 30 years old. From the earliest analyses of IIT, the phenomenon has been associated with Regional Trading Agreements (RTAs). An important motivation for this research is associated with the issue of adjustment costs; if most of the growth in trade resulting from the RTA is attributable to IIT, then the resource re-allocation costs in the short to medium term are likely to be lower. This is because IIT does not require inter-industry factor movements. In attempting to determine whether RTAs are associated with increases in IIT, previous researchers have looked at two questions:(i) whether IIT has increased following the formation of the RTA, and (ii) whether IIT is more important in intra versus extra RTA trade. To answer the first question, researchers have used movements in the value of the Grubel and Lloyd (1975, GL) index over time, while the second has been dealt with by comparing the value of the GL index for intra versus extra RTA trade. Employing the GL index in these ways to answer these questions can lead to error. In this paper, we develop a new methodology for analysing both of these questions which overcomes the problems associated with using the GL index. First, we derive a formula which decomposes the growth in total trade (TT) into the contributions of growth in IIT and net trade (NT). Second, we show how to measure the contributions of intra and extra RTA trade to the growth in a country's total multilateral IIT and NT. The focus of our study is on the effects of the Australia-New Zealand Closer Economic Relations Trading Agreement (ANZCERTA) on Australian and New Zealand trade. All our formulas are computed with data for 130 Australian and New Zealand manufacturing industries defined at the 3-digit level of the Standard International Trade Classification (SITC) for the periods 1981 to 1986 and 1986 to 1991. Classification-JEL: F32, F17 Creation-Date: 1995-04 Keywords: intra-industry trade, regional trading agreements, adjustment costs File-URL: https://www.copsmodels.com/ftp/workpapr/g-114.pdf File-Format: Application/pdf File-Function: Initial version, 1995-04 File-URL: https://www.copsmodels.com/elecpapr/g-114.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-114 Template-type: ReDIF-Paper 1.0 Title: Coordinating Policies for Human Resources Development Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: In its recent White Paper on Employment and Growth, the Australian Government announced a comprehensive new agenda to supplement its existing employment policies. It includes the following major elements * reforms to labour market assistance; * training and education reforms; * a reconstructed social security system; * a regional strategy; * workplace agreements; and * microeconomic reforms. An important consideration in the implementation of such a multi-faceted policy program is that its various elements are not independent of each other. While the Government has been at pains to ensure that the program is coherent in a qualitative sense, its quantitative assessment of the interdependencies between the program's elements has been limited. In this paper, we consider some of the issues associated with coordinating policies for human resources development, using the White Paper and the National Vocational Education and Training (VET) Strategy to provide a context for the discussion. In particular, we review the role of the MONASH forecasting system as a vehicle for coordinating the training plans of decentralised advisory bodies within the National VET Strategy. We also describe how the system can be used to delineate interdependencies in the Government's program, and include a quantitative assessment of effects of proposed microeconomic reforms on the demand for labour in particular occupations. Classification-JEL: C68, D58, E47, I20, J21 Creation-Date: 1996-03 File-URL: https://www.copsmodels.com/ftp/workpapr/g-118.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/g-118.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-118 Template-type: ReDIF-Paper 1.0 Title: Future Workforce Skills: Projections with the MONASH Model Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: B.R. Parmenter Author-X-Name-First: B.R. Author-X-Name-Last: Parmenter Abstract: Since 1993 the Centre of Policy Studies has been using the MONASH model to produce year-by-year forecasts for the Australian economy, typically with forecast horizons of about ten years. MONASH is a large dynamic applied general equilibrium model. The MONASH forecasting system takes as inputs macro-economic forecasts from Syntec Economic Services, forecasts for the agricultural and mining sectors from the Australian Bureau of Agricultural and Resource Economics, forecasts for international tourism from the Bureau of Tourism Research, and scenarios on technical change from extrapolations of recent historical experience. The MONASH model then produces consistent forecasts for 112 industries, 56 regions and 282 occupations. The occupational forecasts give projections of the demand for the ASCO unit groups in each of the six Australian States. These forecasts provide a background for assessing the skills likely to be required in the Australian workforce in the next decade. In this paper we report a selection of our most recent (as at February 1995) forecasts for occupations, and explain how they relate to the macroeconomic and industrial dimensions of the overall forecasts. Classification-JEL: C68, D58, E47, I20, J21 Creation-Date: 1996-03 File-URL: https://www.copsmodels.com/ftp/workpapr/g-116.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/g-116.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-116 Template-type: ReDIF-Paper 1.0 Title: Economic Modelling and the National Strategy for Vocational Education and Training Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: B.R. Parmenter Author-X-Name-First: B.R. Author-X-Name-Last: Parmenter Abstract: In 1994, the Australian National Training Authority (ANTA) was established by agreement between the Commonwealth, State and Territory governments. Central to the agreement is the National Strategy for Vocational Education and Training (VET) which is organized around the four main themes of responsiveness, quality, accessibility and efficiency. To promote efficiency in the allocation of training resources, ANTA and a number of State government agencies responsible for VET planning take into account employment forecasts generated using the MONASH model of the Australian economy. To promote responsiveness to the needs of industry, a network of industry training and advisory bodies (ITABs) has been set up. The ITABs' responsibilities include the development of "industry-credible, high-quality industry training plans as frameworks for identifying training needs in each industry, and for considering resource requirements". In this paper we review some of the issues that arise in reconciling the information produced at these diverse levels of planning. In particular, we consider the role of the MONASH forecasting system as a planning framework for vocational education and training, and the caveats that must be borne in assessing the performance of the system in this role. Classification-JEL: C68, D58, E47, I20, J21 Creation-Date: 1996-03 File-URL: https://www.copsmodels.com/ftp/workpapr/g-117.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/g-117.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-117 Template-type: ReDIF-Paper 1.0 Title: Compositional Data Analysis and Zeros in Micro Data Author-Name: Jane M. Fry Author-X-Name-First: Jane M. Author-X-Name-Last: Fry Author-Name: Tim R.L. Fry Author-X-Name-First: Tim R.L. Author-X-Name-Last: Fry Author-Name: Keith R. McLaren Author-X-Name-First: Keith R. Author-X-Name-Last: McLaren Abstract: The application of compositional data analysis methods in economics has some attraction. In particular, this methodology ensures that the stochastic component of budget share models will satisfy the restriction of shares to the unit simplex. The methodology relies upon the use of log-ratios in the statistical analysis. Such an approach is not possible when the data to be analyzed includes observations where the observed budget share is zero. We therefore extend the methods of compositional data analysis to the situation where the data to be analyzed includes observations where the observed budget share is zero. The modified compositional data methods are discussed both in statistical terms and through potential economic interpretations of the method. Further, the modified methodology is applied to the 1988 Australian Household Expenditure Survey yielding estimates for a system of Engel curves. Classification-JEL: C51, D12 Creation-Date: 1996-03 Keywords: Engel Curves, Modified Almost Ideal Demand System, Composi- tional Data Analysis, Australian H E S data File-URL: https://www.copsmodels.com/ftp/workpapr/g-120.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/g-120.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-120 Template-type: ReDIF-Paper 1.0 Title: Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy Author-Name: Kaludura Abayasiri-Silva Author-X-Name-First: Kaludura Author-X-Name-Last: Abayasiri-Silva Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: Recently some researchers have suggested that economies of scale and imperfect competition play a major role in determining the effects of exogenous policy shocks. Thus they have emphasised the need to incorporate industrial organisation features into computable general equilibrium (CGE) models. However, our knowledge of this new paradigm is still in its infancy it is not yet clear how models of this type should be specified and to what extent their predictions are sensitive to the choice of specification. This paper describes a 23-sector CGE model of the Australian economy, based on ORANI and on Horridge (1987a and 1987b), which incorporates economies of scale and imperfect competition. The model is used to investigate whether adding these new features affects simulation results. We present results for three different types of non-competitive regime and compare these with results generated by a traditional (constant returns and perfect competition) version of the same model. Classification-JEL: C68, L11, L13 Creation-Date: 1996-03 Keywords: Economies of scale, imperfect competition, applied general equilibrium models File-URL: https://www.copsmodels.com/ftp/workpapr/op-84.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/op-84.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-84 Template-type: ReDIF-Paper 1.0 Title: The Medium Term Outlook for Labour Demand: An Economy Wide Assessment Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: This paper presents a detailed assessment of the medium term outlook for the demand for labour in Australia. Forecasts are reported for employment by industry, by occupation, by State and Territory, by hours worked and by skill level. The forecasts are driven, in the first instance, by a fully articulated view about the outlook for the macroeconomy. This macro view is then combined with projections for various industry specific variables prepared by relevant expert organisations. Coherence between the different sources is ensured by incorporating them in a single simulation using the MONASH model, a large applied general equilibrium model of the Australian economy. In deriving the forecasts, attention has been paid to the effect of technological and social change on the structure of the economy in recent years, and to the implications of that change for future labour demand. The paper deals particularly with technical change which affects the distribution of employment across occupations within industries, and the distribution across different categories of hours worked within occupations. Tables are included to illustrate how the forecasting system can be interrogated to reveal * the contributions of various industries to employment growth for a selected occupation, and * the relative importance of output growth, capital growth and labour saving technical change to industry employment growth. The paper concludes with a review of some issues associated with making a proper assessment of the forecasts. Classification-JEL: C68, D58, E47, J21 Creation-Date: 1996-04 File-URL: https://www.copsmodels.com/ftp/workpapr/op-87.pdf File-Format: Application/pdf File-Function: Initial version, 1996-04 File-URL: https://www.copsmodels.com/elecpapr/op-87.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-87 Template-type: ReDIF-Paper 1.0 Title: The Theoretical Structure of MONASH-MRF Author-Name: Matthew W. Peter Author-X-Name-First: Matthew W. Author-X-Name-Last: Peter Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: G.A.Meagher Author-X-Name-First: Author-X-Name-Last: G.A.Meagher Author-Name: Fazana Naqvi Author-X-Name-First: Fazana Author-X-Name-Last: Naqvi Author-Name: B.R.Parmenter Author-X-Name-First: Author-X-Name-Last: B.R.Parmenter Abstract: This paper presents the theoretical specification of the MONASH-MRF model. MONASH-MRF is a multiregional multisectoral model of the Australian economy. Included is a complete documentation of the model's equations, variables and coefficients. The documentation is designed to allow the reader to cross-reference the equation system presented in this paper in ordinary algebra, with the computer implementation of the model in the TABLO language presented in CoPS/IMPACT Preliminary Working Paper No. OP-82. Classification-JEL: C68, D58, R10, R13 Creation-Date: 1996-06 Keywords: multiregional, regional modelling, CGE, regional and Federal government finances File-URL: https://www.copsmodels.com/ftp/workpapr/op-85.pdf File-Format: Application/pdf File-Function: Initial version, 1996-06 File-URL: https://www.copsmodels.com/elecpapr/op-85.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-85 Template-type: ReDIF-Paper 1.0 Title: Medium- and Long-run Consequences for Australia of an APEC Free Trade Area: CGE Analyses using the GTAP and MONASH Models Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Karen M. Huff Author-X-Name-First: Karen M. Author-X-Name-Last: Huff Author-Name: Robert McDougall Author-X-Name-First: Robert Author-X-Name-Last: McDougall Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: Two large applied general equilibrium models, GTAP and MONASH, are used in this paper to simulate the elimination of trade barriers among the members of APEC. These models focus respectively on global trading relations and on the detailed sectoral, occupational, and regional dimensions of the Australian economy. We find that the mature industrialized members of APEC are likely to experience modest increases in real GDP from the trade reform, but that there is scope for very big advances in real GDP in some Asian member countries (especially those with high initial trade barriers against imports of capital goods). Relative to base case, Thailand/ Philippines (treated as a single aggregate in these simulations) is projected (after an adjustment period of one to two decades) to have the potential for a 39 per cent rise in GDP due to the formation of an APEC trade block. Other countries reaching double figures are South Korea (14 per cent), New Zealand (11 per cent) and Indonesia (10.5 per cent). These increases are partly at the expense of non-APEC countries which experience on average a 1 per cent fall in GDP due to lost markets and deteriorating terms of trade. A substantial limitation of these projections is that we have not been able to keep track of the ownership of assets; thus rises in GDP do not necessarily imply increases in welfare. The potential long-run increases in APEC members' GDP are highly dependent on international capital mobility. Relative to the case of full mobility, limiting capital growth to what can be financed internally within regions causes the sizes of the projected increases to fall in all member regions except North America. In the case of Thailand/ Philippines, the 39 per cent increase falls dramatically to about 2.5 per cent. The projected long-run rise in Australia's GDP when capital is mobile is about 3 per cent (relative to the no-APEC case). Considerable structural changes accompany this rise: milk and meat products do extremely well (with rises in real output of over 30 per cent relative to base case); traditionally highly protected industries (e.g., synthetic fibres, cotton yarns, footwear and motor vehicles) experience long-run falls of approximately 10 to 20 per cent. Over two thirds of the gain in the rise in the demand price for Australian milk products is due to the opening up of the Japanese market. Classification-JEL: D58, F14 Creation-Date: 1996-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-111.pdf File-Format: Application/pdf File-Function: Initial version, 1996-12 File-URL: https://www.copsmodels.com/elecpapr/g-111.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-111 Template-type: ReDIF-Paper 1.0 Title: How Does the Share of Imports Change During Structural Adjustment? Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: Estimating the price responsiveness of market shares during a period of structural transition requires a distinction to be made between responses to variables explicitly recognized in the model and those due to more general changes in the trading environment. Often the latter are minimally modelled as market penetration curves taking the form of a sigmoid trend. Broadly this is the approach followed in the present paper; however, the trend 'parameter' capturing ultimate market share at a fixed level of price competitiveness is itself made a logistic function of the relative price variable measuring such competitiveness. The application of the model is to quarterly data on the share of imports in Australian personal consumption over the 1980s and the first half of the 1990s. Most of the signal relevant to price competition between domestic and imported consumer goods occurred over the four years 1985-1988. This coincided with sizeable movements in the real exchange rate; and therefore, presumably, with collinear movements in the prices of the components within the domestic and the imported aggregates, which would be favourable circumstances for the application of Hicks' composite commodity idea. The responses in aggregate market shares during this episode suggest a very long-run Armington elasticity in the range 3.4 to 4.8, with short-run (quarterly) values of 0.6 to 0.8. Classification-JEL: D12, C13, C22, F47, O12 Creation-Date: 1997-08 Keywords: import substitution, Armington elasticity, consumption, structural adjustment, logistic function, market penetration curve File-URL: https://www.copsmodels.com/ftp/workpapr/op-86.pdf File-Format: Application/pdf File-Function: Initial version, 1997-08 File-URL: https://www.copsmodels.com/elecpapr/op-86.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-86 Template-type: ReDIF-Paper 1.0 Title: Structural Change, the Demand for Skilled Labour and Lifelong Learning Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: In a recent report, the Organisation for Economic Cooperation and Development has argued that certain key developments, including globalisation, population ageing and the diffusion of information technologies, are causing a shift in the demand for labour in modern advanced economies. Demand is thought to be moving away from relatively low-skilled agricultural and production occupations in favour of highly-skilled professional, technical, administrative and managerial occupations. Moreover, rising turnover in the labour market is tending to increase the rate at which existing skills are rendered obsolete. Hence workers in OECD countries are coming under mounting pressure to adapt and enhance their skills on an ongoing basis; that is, today's workers must participate in lifelong learning. This paper investigates the quantitative evidence for the proposition using, as a case study, the distribution of employment across occupations in Australia. Three changes in this distribution are considered: the change that actually occurred between 1986-87 and 1994-95, a forecast of the change that is likely to occur between 1994-95 and 2002-03, and an estimate of the change that will result from trade liberalisation proposals advanced by the Asia Pacific Economic Cooperation forum. In each case the change in the occupational distribution is used to infer the effect on the demand for labour differentiated by qualification level, qualification field and age group. Unlike much of the structural analysis that accompanies discussions of lifelong learning, the approach here is comprehensive. The analysis is not restricted to occupations thought on a priori grounds to have a particular affinity to lifelong learning, but considers changes in employment across all occupations. Hence the role of particular occupations, such as those associated with information technology, for example, are able to be placed in a an economy-wide perspective. The analysis reveals that the factors driving the demand for labour are numerous and diverse, and suggests that generalisations and "stylised facts" are likely to be of only limited usefulness in determining training priorities. Classification-JEL: C68, D58, E47, F17, J21, I20, J23 Creation-Date: 1997-08 File-URL: https://www.copsmodels.com/ftp/workpapr/g-121.pdf File-Format: Application/pdf File-Function: Initial version, 1997-08 File-URL: https://www.copsmodels.com/elecpapr/g-121.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-121 Template-type: ReDIF-Paper 1.0 Title: Dynamic Analysis of a 'Solow-Romer' Model of Endogenous Growth Author-Name: Gordon Schmidt Author-X-Name-First: Gordon Author-X-Name-Last: Schmidt Abstract: The model of endogenous economic growth developed by Paul Romer (1990a) is briefly reviewed and modified by substituting a Solow type consumption function in place of the utility maximising behaviour of consumers. The dynamic system and steady-state growth path of this Solow-Romer model are then derived. Such modification allows the dynamics of the model, in response to certain economic shocks, to be examined in terms of phase diagrams; and illustrates the instructional power of this approach. The impacts of the same economic shocks are also analysed more directly by numerical integration of the differential equations and boundary conditions describing the dynamic system of the model. Adjustment processes are found to be relatively lengthy; and to be characterised by significant initial jumps or discontinuities in certain variables. Furthermore, in some cases these initial jumps can be in the opposite direction to that of the subsequent adjustment. Such results emphasise the importance of explicit analysis of the dynamics of the adjustment paths of growth models and their relevance for economic policy. Classification-JEL: C68, O12 Creation-Date: 1997-08 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-68.pdf File-Format: Application/pdf File-Function: Initial version, 1997-08 File-URL: https://www.copsmodels.com/elecpapr/ip-68.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-68 Template-type: ReDIF-Paper 1.0 Title: Should Tariff Reductions be Announced? An Intertemporal Computable General Equilibrium Analysis Author-Name: Michael Malakellis Author-X-Name-First: Michael Author-X-Name-Last: Malakellis Abstract: In this paper the macro and structural implications of three alternative tariff-reduction strategies are examined. Under the first strategy, which is similar to that adopted in Australia in 1973, the tariff cut is implemented without warning. The second strategy is consistent with the current approach of phasing in tariff cuts according to a previously announced schedule. Under the third strategy the tariff cut is implemented several years after it is announced. We find that the long-run effects of the alternative tariff reduction strategies are similar, but that the adjustment paths are not. Our results suggest that if tariffs are to be reduced then it is preferable to implement the policy without warning. The results emphasise the point that the sooner tariffs are reduced the sooner will the allocative efficiency gains from doing so be realised. Classification-JEL: D58, C68, E27, F13 Creation-Date: 1997-08 Keywords: industry protection, tariffs, allocative efficiency, com- parative-dynamic simulation, computable general equilibrium model, labour market adjustment, timing issues File-URL: https://www.copsmodels.com/ftp/workpapr/op-88.pdf File-Format: Application/pdf File-Function: Initial version, 1997-08 File-URL: https://www.copsmodels.com/elecpapr/op-88.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-88 Template-type: ReDIF-Paper 1.0 Title: Productivity in Australian Education between 1986/87 and 1993/94 Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: This paper attempts to estimate the change in total factor productivity (TFP) in total education services provided in Australia, between 1986/87 and 1993/94. A simple model is developed and calibrated using Australian data. TFP is estimated to have fallen by between 16 and 26 per cent depending on what is assumed about the behaviour of average quality over this period. Classification-JEL: I20, I29 Creation-Date: 1997-11 Keywords: education services, productivity, real output measures for education File-URL: https://www.copsmodels.com/ftp/workpapr/g-123.pdf File-Format: Application/pdf File-Function: Initial version, 1997-11 File-URL: https://www.copsmodels.com/elecpapr/g-123.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Economic Papers, vol. 19, iss. 3, 2000, pp. 28-39. Handle: RePEc:cop:wpaper:g-123 Template-type: ReDIF-Paper 1.0 Title: Re-Estimating Real Output for Service Industries in Australia Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: This paper examines the current national accounts measure of real output for five major service industries in Australia. It finds that real output measures for insurance services; banking services; non-bank financial services; and education services are unsatisfactory. Alternative estimates based on acceptable output proxies are presented for these industries for the period 1986/87-1993/94. The estimates indicate that insurance, banking and non-bank financial services have grown more quickly than previously thought, while education services have grown less quickly than earlier estimates suggested. The effect on GDP of these estimates is also presented. Classification-JEL: E23, D24 Creation-Date: 1997-12 Keywords: insurance services, financial services, education services, communication services, service industries, real output measures, input- output industries File-URL: https://www.copsmodels.com/ftp/workpapr/g-124.pdf File-Format: Application/pdf File-Function: Initial version, 1997-12 File-URL: https://www.copsmodels.com/elecpapr/g-124.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-124 Template-type: ReDIF-Paper 1.0 Title: Measuring Output of Government Administration, Defence and Property and Business Services: Some Estimates for Australia Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: This paper examines the current national accounts measure of real output for three major service industries in Australia. It finds that real output measures for government administration services; defence services; and property and business services are unsatisfactory. Alternative estimates are presented for government administration services and defence services for the period 1986/87-1993/94. The estimates for government administration services compare well with the current national accounts measure, whereas for defence services they indicate that real output has grown less quickly than previously thought. No estimates for property and business services are presented due to lack of data. Classification-JEL: H50, H56, L80, L84 Creation-Date: 1997-12 Keywords: government administration services, defence services, property and business services, service industries, real output measures for service industries, input-output industries File-URL: https://www.copsmodels.com/ftp/workpapr/g-127.pdf File-Format: Application/pdf File-Function: Initial version, 1997-12 File-URL: https://www.copsmodels.com/elecpapr/g-127.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-127 Template-type: ReDIF-Paper 1.0 Title: Women and Part-Time Employment: The Waverley Survey Author-Name: Judith S. Willis Author-X-Name-First: Judith S. Author-X-Name-Last: Willis Abstract: This paper contributes data about women and part-time employment in Australia. "Part-time" is defined as one or more, but less than thirty-five hours per week. Findings from a survey conducted throughout the City of Waverley, Melbourne (1977) are given against a background of similar data from the Australian Bureau of Statistics (1977-1996) and the Women and Employment Survey of Great Britain (1980). Aspects of part-time employment are reported for part-time working women and for women who had no paid work, but "would... like to work part-time now". These aspects include range of hours, pattern and number of hours by school level of youngest child, number of weekdays worked, trade union membership, casual work, travel time to work, work at home, employment benefits (including promotion) and work preferences. Classification-JEL: J2, J4, J7 Creation-Date: 1997-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-122.pdf File-Format: Application/pdf File-Function: Initial version, 1997-12 File-URL: https://www.copsmodels.com/elecpapr/g-122.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-122 Template-type: ReDIF-Paper 1.0 Title: When Modellers Behave Like Lawyers: Have we Lost The Plot? Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: Australia has made outstanding contributions to the use of quantitative economic models in public policy discussions. That leading role is now threatened by the increasing use of econometric modellers in an advocacy, lawyer-like role, rather than as impartial sources of the best available technical advice. This development became inevitable once it became fashionable in Canberra during the mid 1980s to deny the existence of public goods and to force the funding of economic intelligence garnering increasingly into the private sector. This paper argues that we are all the losers. Classification-JEL: D58, D72 Creation-Date: 1998-01 File-URL: https://www.copsmodels.com/ftp/workpapr/g-125.pdf File-Format: Application/pdf File-Function: Initial version, 1998-01 File-URL: https://www.copsmodels.com/elecpapr/g-125.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-125 Template-type: ReDIF-Paper 1.0 Title: From Dornbusch to Murphy: Stylized Monetary Dynamics of a contemporary Macroeconometric Model Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: Dornbusch's 1976 overshooting exchange rate model (hereafter, DBM) has long been known to underpin several large macro models, including the Murphy Model (MM). But the dynamic adjustment paths of variables in MM differ markedly from those in DBM, even qualitatively. A leading case in point is the exchange rate which in MM undershoots its new long run-equilibrium value after the injection of a monetary shock, and then actually moves away from this equi-librium for a time before approaching it via a damped cyclical adjustment path (whereas the corresponding path in DBM is monotonic). This paper gives a simplified account of how this comes about. The emphasis is not so much on theoretical rigour but on providing a convincing practical demonstration. Using the simplest form of DBM as a starting point, it is shown how one can develop a miniature model exhibiting an MM-like response to a monetary shock. The key idea is that aggregate demand does not respond instantaneously (as in DBM) to shocks in the macroeconomic environment, but shows some degree of inertia. Nothing more is required to reconcile the qualitative dynamics of MM with DBM. Classification-JEL: E17, E32 Creation-Date: 1998-01 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-69.pdf File-Format: Application/pdf File-Function: Initial version, 1998-01 File-URL: https://www.copsmodels.com/elecpapr/ip-69.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-69 Template-type: ReDIF-Paper 1.0 Title: Can Tax Reform Work in an Economy Where Tax Avoidance and Evasion are Endemic? Author-Name: Edimon Ginting Author-X-Name-First: Edimon Author-X-Name-Last: Ginting Abstract: In this model firms seek to minimise their tax liabilities by purchasing rent-seeking services from a provider who also sells legitimate public services to the government. The provider enjoys economies of scope - its two outputs are produced jointly. Tax reform in this setting can increase both government revenue and the efficiency of the economy because a type of Laffer curve is operational and because such reform can lead to resources being moved out of rent-seeking activity. Later this partial equilibrium framework will be embedded within a conventional general equilibrium model. Classification-JEL: C68, D72 Creation-Date: 1998-01 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-71.pdf File-Format: Application/pdf File-Function: Initial version, 1998-01 File-URL: https://www.copsmodels.com/elecpapr/ip-71.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-71 Template-type: ReDIF-Paper 1.0 Title: Estimating the behaviour of Productivity in Government Administration Services in Australia Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: This paper estimates the change in total factor productivity (TFP) in government administration services in Australia for the period 1986/87-1993/94. A simple model is presented and calibrated using Australian data. TFP is estimated to have remained constant over this period. The issues with respect to measuring the output of government administration services are also explored. Classification-JEL: D24, H40 Creation-Date: 1998-01 Keywords: total factor productivity, government administration services, real output measures for government administration services File-URL: https://www.copsmodels.com/ftp/workpapr/g-126.pdf File-Format: Application/pdf File-Function: Initial version, 1998-01 File-URL: https://www.copsmodels.com/elecpapr/g-126.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Economic Papers, vol. 17, no. 2, 1998, pp. 48-55. Handle: RePEc:cop:wpaper:g-126 Template-type: ReDIF-Paper 1.0 Title: LONG-RUN SIMULATIONS WITH GTAP: Illustrative Results from APEC Trade Liberalisation Author-Name: Terrie Walmsley Author-X-Name-First: Terrie Author-X-Name-Last: Walmsley Abstract: In static applied general equilibrium models, the exogenous/endogenous split between variables (or closure) is used to infer the time frame over which the effects of a shock are simulated. This paper introduces a long-run closure for the GTAP model (Hertel and Tsigas, 1997) and uses this closure to simulate and compare the short-run and long-run effects of Asia-Pacific trade liberalisation. The approach explored here incorporates some relatively minor changes to existing GTAP theory in order to define a steady state in which growth rates of all real variables are uniform. Such uniformity must apply in the initial database (as well as in the post-shock solution). So to implement the new long run in GTAP a new initial database must first be created. Details concerning the creation of the new database are given, and results under the new approach are compared with those obtained under the old. The emphasis of this paper is on the development of a long-run closure in which the percentage change form equations of the model and the relationships between the levels variables in the GTAP database are consistent. Further research is required into these types of long-run closures to incorporate changes in ownership of capital to ensure that changes in welfare are adequately modelled. In the results reported here, GDP is not a useful guide to national welfare. The long-run closures introduced here are also compared with another comparative static long-run closure developed for GTAP by Francois, MacDonald and Nordstrom (1996). Classification-JEL: D58, F15 Creation-Date: 1998-01 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-70.pdf File-Format: Application/pdf File-Function: Initial version, 1998-01 File-URL: https://www.copsmodels.com/elecpapr/ip-70.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-70 Template-type: ReDIF-Paper 1.0 Title: The Nested Binary CES Composite Production Function: CRTS with different (but constant) pair-wise elasticities of substitution among three factors Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: The policy debate on global warming has raised the prospect of large taxes on Greenhouse pollutants leading to a very substantial rise in the price of energy. Models in which output is produced according to a technology in which capital (K), labour (L) and energy (E) are substitutable run into the difficulty of how to allow parsimoniously for the higher likely substitutability between K and E than between L and E. Nesting all three factors in a single CES aggregator function is unsatisfactory because of the constancy over pairs of factors of partial substitution elasticities. This paper is a variation on the CES theme. It presents a new composite three-input production function (based on CES and Leontief components) which allows the partial substitution elasticities between capital and labour, capital and energy, and between labour and energy, to differ but to remain individually constant. Classification-JEL: D2, E1 Creation-Date: 1998-04 File-URL: https://www.copsmodels.com/ftp/workpapr/op-89.pdf File-Format: Application/pdf File-Function: Initial version, 1998-04 File-URL: https://www.copsmodels.com/elecpapr/op-89.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-89 Template-type: ReDIF-Paper 1.0 Title: The Economy-wide Impact of Better Governance: Cutting Informal Taxes in Indonesia Author-Name: Edimon Ginting Author-X-Name-First: Edimon Author-X-Name-Last: Ginting Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: In some developing economies the costs of meeting informal taxes (corruption of various sorts) have been put as high as 30 percent of the market value of output in some industries. Current political reform in Indonesia raises the prospect of a substantial fall in such costs. To assess the consequences for Indonesia's international competitiveness and national welfare requires the development and use of an applied general equilibrium model which explicitly recognises the existence of non-official imposts and the substantial (but socially wasteful) economic activity expended in attempting to reduce them. ORANI-RSA is such a model, recently developed for this purpose. In short- and long-run simulations the nominal rate at which informal taxes are levied is halved and the response of the economy determined. Not unexpectedly, competitiveness and the trade account improve substantially (with a 2 percent short-run fall in the real foreign-currency cost of the Rupiah). Indonesian welfare also improves. The only industry to decline is the service providing sector (corresponding roughly to the bureaucrats who supply intermediation between legitimate producers and the corrupt members of the power elite). The reform causes a fall in income from corruption, while redistributive effects via differential consumption patterns reinforce the improvement in the trade balance. Classification-JEL: K42, D58, O53 Creation-Date: 1998-04 File-URL: https://www.copsmodels.com/ftp/workpapr/op-92.pdf File-Format: Application/pdf File-Function: Initial version, 1998-04 File-URL: https://www.copsmodels.com/elecpapr/op-92.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-92 Template-type: ReDIF-Paper 1.0 Title: The Potential Benefits of Hilmer and Related Reforms: Electricity Supply Author-Name: John L. Whiteman Author-X-Name-First: John L. Author-X-Name-Last: Whiteman Abstract: This article examines the macroeconomic impact of the elimination of x-inefficiency in the Australian electricity supply industry using a computable general equilibrium (CGE) model of the Australian economy. Data envelopment analysis and a stochastic production frontier model are applied to measure x-inefficiency in the electricity industry. It is assumed that microeconomic reform will eliminate this x-inefficiency. The potential increase in total factor productivity resulting from microeconomic reform is introduced into the CGE model as a Hicksian-neutral factor-augmenting technological change. Two alternative labour market assumptions are utilised in measuring the macroeconomic benefits of the microeconomic reform. The results suggest that even under the most pessimistic labour market assumptions, the potential benefits of microeconomic reform in an industry such as electricity will not be trivial. It therefore follows that the impact of microeconomic reform on economic growth could be substantial, particularly if the Australian labour market is more flexible than hitherto assumed. Classification-JEL: D24 Creation-Date: 1998-04 Keywords: microeconomic reform, x-inefficiency, data envelopment analysis, stochastic production frontier, computable general equilibrium, natural rate of unemployment File-URL: https://www.copsmodels.com/ftp/workpapr/g-128.pdf File-Format: Application/pdf File-Function: Initial version, 1998-04 File-URL: https://www.copsmodels.com/elecpapr/g-128.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-128 Template-type: ReDIF-Paper 1.0 Title: The Effects of Current Fiscal Restraint on the Australian Economy: an Applied General Equilibrium Analysis with Imperfect Competition Author-Name: Kaludura Abayasiri-Silva Author-X-Name-First: Kaludura Author-X-Name-Last: Abayasiri-Silva Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: The objective of this paper is to examine the short run and long run effects of the reduction of government expenditure on the Australian economy using an applied general equilibrium model, which incorporates economies of scale and imperfect competition. The paper describes a 23-sector computable general equilibrium model of the Australian economy, and covers short-run as well as long-run profit-maximising behaviour of the firm. Economies of scale are incorporated in the model at the industry level and the firm level. The pricing behaviour is modelled as perfectly competitive, monopolistically competitive and in other ad hoc ways, as in Harris (1984). The different assumptions about technology, pricing behaviour and firm entry are combined in various ways to produce a variety of scenarios in our simulations. We present results for three different types of non-competitive regime and compare these with results generated by a traditional version of the same model. Classification-JEL: C68, L11, L13 Creation-Date: 1998-04 File-URL: https://www.copsmodels.com/ftp/workpapr/op-91.pdf File-Format: Application/pdf File-Function: Initial version, 1998-04 File-URL: https://www.copsmodels.com/elecpapr/op-91.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-91 Template-type: ReDIF-Paper 1.0 Title: Scale Efficiency in the New Zealand Dairy Industry: A Non-Parametric Approach Author-Name: Mohammad Jaforullah Author-X-Name-First: Mohammad Author-X-Name-Last: Jaforullah Author-Name: John Whiteman Author-X-Name-First: John Author-X-Name-Last: Whiteman Abstract: The objective of this paper is to measure the scale efficiency of the New Zealand dairy industry and to examine the relationship between farm size and efficiency. Data envelopment analysis (DEA) is applied to a sample of 264 dairy farms. The results suggest that 19 per cent of these farms are operating at optimal scale, 28 per cent at above optimal scale, and 53 per cent at below optimal scale. On average the optimal size for New Zealand dairy farms is estimated at 83 hectares with a herd of 260 animals. Average technical efficiency is estimated at 89 per cent. Classification-JEL: D24 Creation-Date: 1998-06 Keywords: Data envelopment analysis (DEA), benchmarking partnerships, technical efficiency, optimal, supra-optimal and sub-optimal scale File-URL: https://www.copsmodels.com/ftp/workpapr/g-129.pdf File-Format: Application/pdf File-Function: Initial version, 1998-06 File-URL: https://www.copsmodels.com/elecpapr/g-129.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-129 Template-type: ReDIF-Paper 1.0 Title: Forecasting and Policy Analysis with a Dynamic CGE Model of Australia Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: The main ideas in this paper are: (a) that CGE models can be used in forecasting; and (b) that forecasts matter for policy analysis. We demonstrate these ideas by describing an application of MONASH, a dynamic CGE model of Australia, to the Australian motor vehicle industry over the period 1987 to 2016. The key to generating believable forecasts is to use detailed information available from expert groups specializing in the analysis of different aspects of the economy. In MONASH we incorporate forecasts by specialists: on the domestic macro economy; on Australian economic policy; on world commodity markets; on international tourism; on production technologies; and on consumer preferences. We have found that CGE forecasts incorporating such specialist information are readily saleable to public and private organizations concerned with investment, employment, training and education issues. This is partly because the economy-wide consistency guaranteed by the CGE approach enables users of economic intelligence to see the disparate forecasts dealing with different parts and aspects of the economy within an integrated perspective. Over the last thirty five years, CGE models have been used almost exclusively as aids to "what if" (usually policy) analysis. In almost all cases it has been assumed that the effects of the shock under consideration are independent of the future path of the economy. Thus, for "what if" analysis, a common implicit view is that realistic basecase forecasts are unnecessary. Contrary to this view, we find that "what if" answers depend significantly on the basecase forecasts. This is not surprising when we are concerned with unemployment and other adjustment costs. However, we find that basecase forecasts are critical even when our concern is the long-run welfare implications of a policy change. For example, we find that the simulated long-run effects of a tariff cut on imported cars are strongly influenced by the basecase forecast of the rate of technical progress in the car industry relative to that in other industries. Classification-JEL: C53, C68, D58, F47 Creation-Date: 1998-06 Keywords: CGE model, forecasting, policy analysis, MONASH model, automobile industry, adjustment costs File-URL: https://www.copsmodels.com/ftp/workpapr/op-90.pdf File-Format: Application/pdf File-Function: Initial version, 1998-06 File-URL: https://www.copsmodels.com/elecpapr/op-90.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-90 Template-type: ReDIF-Paper 1.0 Title: Long-run Effects on China of APEC Trade Liberalisation Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Brian Parmenter Author-X-Name-First: Brian Author-X-Name-Last: Parmenter Author-Name: Xiao-Guang Zhang Author-X-Name-First: Xiao-Guang Author-X-Name-Last: Zhang Abstract: Plans for APEC trade liberalisation include the elimination of all tariffs between member states. In this paper we use two computable general equilibrium models to examine the effects of these plans, focussing on China. Our modelling shows that liberalisation increases China's capital stock and real GDP. The implication for Chinese industries depend on the extent to which liberalisation exposes them to additional import competition. Industries strongly stimulated include Textiles and Communications Equipment. Transport Equipment is the most adversely affected. Chinese regional results follow from the industrial compositions of the regions, with Zhejiang the most favourably affected and Jilin the least. Classification-JEL: C68, F15 Creation-Date: 1998-10 Keywords: Computable General Equilibrium Models, Economic Integration File-URL: https://www.copsmodels.com/ftp/workpapr/g-130.pdf File-Format: Application/pdf File-Function: Initial version, 1998-10 File-URL: https://www.copsmodels.com/elecpapr/g-130.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Pacific Economic Review, Vol 5(1) 2000, pp. 15-47. Handle: RePEc:cop:wpaper:g-130 Template-type: ReDIF-Paper 1.0 Title: Market Power in Australian Manufacturing Industry: A Confirmation of Hall's Hypothesis Author-Name: Kaludura Abayasiri-Silva Author-X-Name-First: Kaludura Author-X-Name-Last: Abayasiri-Silva Abstract: Robert Hall (1986, 1988, and 1990) has emphasised the importance of imperfect competition and economies of scale in explaining procyclical movements in measured total factor productivity in US industries. In contrast to the labour hoarding hypothesis and real business cycle theorists, he cites the observed procyclical movement in total factor productivity in US industries as evidence against perfect competition, revealing that prices substantially exceed marginal costs. Following the work of Hall (1986, 1988 and 1990), his paper investigates whether the procyclical movements in total productivity in Australian manufacturing industries provide some evidence for a particular type of market structure. The main contribution of this paper is the provision of a formal explanation for the difference between the estimated markup ratios and returns to scale by using value added data and gross output data, as highlighted in the work of Domowitz, Hubbard and Peterson (1988), Norrbin (1993) and Basu and Fernald (1995, 1997). Our formal explanation shows that, with the use of value added data, the estimated Solow residual (and hence the markup ratios) are almost twice as large as those obtained with gross output data, because of the two different production functions involved in estimating the Solow residual. Moreover, the main results of the paper, based on the value added data, indicate that the price of most Australian manufacturing industries exceeds their marginal costs, as in the case of the US industries. The highest markup ratios are reported by the chemical and the iron and steel industries. The results also provide evidence that the textile, non-mineral products, other transport and photographic and scientific industries behave as competitive industries. Classification-JEL: C68, L11, L13 Creation-Date: 1999-04 Keywords: Market structure, total factor productivity, economies of scale, imperfect competition File-URL: https://www.copsmodels.com/ftp/workpapr/g-132.pdf File-Format: Application/pdf File-Function: Initial version, 1999-04 File-URL: https://www.copsmodels.com/elecpapr/g-132.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-132 Template-type: ReDIF-Paper 1.0 Title: The Government's Tax Package: Further Analysis based on the MONASH Model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: This report builds on an earlier paper discussed by Peter Dixon with the Senate Select Committee on December 18, 1998 which describes a single simulation, with the MONASH model, of the effects of the tax package. A revised version of this simulation is presented here as the central case ; however, the present report is self-contained. The Government plans: to reduce taxes on inputs to business; to reduce income taxes; and to increase taxes on consumption by the introduction of a 10 per cent GST. In our central simulation with the MONASH model, we find, as in the December paper, that: * the long-run resource allocation gains flowing from the proposed tax changes will be negligible; * the package will harm Tourism and benefit most traditional exporters, e.g. Iron ore; the effects on consumer-good industries will be mixed; * employment will be stimulated in the short-run by about 30,000 jobs; * investment will be increased, especially in the short run; and * the package will produce a long-run increase in capital stock in Australia, but little change in economic welfare. A welfare-reducing aspect of the tax package is terms-of-trade reduction. In the central simulation there is a long-run negative effect on Australia's terms of trade associated with the positive effect on overall exports. The negative effect on the terms of trade is exacerbated by a shift in the composition of exports away from services and towards goods. In our basecase forecasts, world prices of services increase relative to those for goods. The negative terms-of-trade effect of the package slightly outweighs the long-run welfare gains associated with other aspects of the package including increases in the capital stock. Our finding of a small negative long-run welfare effect should not be interpreted as inconsistent with Econtech's result obtained using the MM303 model. Econtech found a small long-run welfare gain. The main point is that both models agree that the economic welfare effects of the proposed tax changes will be small. In addition to the central simulation, we conducted six sensitivity simulations. The first is concerned with the labour market. In the central simulation we adopted the favourable assumption that workers make their wage bargains in real after-tax terms. This means that workers accept the income tax cuts in the Government's tax package as compensation for the increase in the CPI associated with the imposition of the GST. In the sensitivity simulation we make the alternative assumption that workers bargain in real before-tax terms. Under this assumption, the GST-induced jump in the CPI produces a corresponding jump in wage demands. We find a significant short-run negative effect on employment, a loss of 100,000 jobs. If the tax package is to be implemented smoothly, it is vital that Australian workers allow their before-tax wages to decline relative to the CPI. The second sensitivity simulation is concerned with exports of tourism and education services. It is clear that the tax package will increase foreign currency prices of Australia's service exports. However it is not clear what elasticity value should be used in translating foreign-currency price increases into resulting reductions in tourist and student numbers. In the central simulation we assumed that foreign elasticities of demand for these services are -3. With this value we found in our central simulation that the tax package will reduce tourism exports by between 9 and 13 per cent, and education exports by between 7 and 12 per cent. Some well-informed commentators think that -3 is too large for the export demand elasticities for services. In the sensitivity simulation we set the export demand elasticities for services at -2, but still find significant damage to service exports. In the low elasticity simulation the long-run terms-of-trade outcome is more favourable than in the central simulation. This converts the small long-run welfare loss in the central simulation into a small long-run welfare gain in the low-elasticity simulation. In the third sensitivity simulation we take the GST off packaged holidays to Australia paid for by foreigners in their own countries. This removal of GST on packaged tours affects only about one sixth of (broadly defined) tourist expenditures. Nevertheless, freeing packaged holidays of GST would have a useful damage-reducing impact on tourism exports. Rather than tourism exports being reduced by between 9 and 13 per cent as in the central simulation, when packaged holidays are GST-free these exports are reduced by between 6 and 10 per cent. On the other hand, failure to charge GST on packaged holidays reduces annual revenue by about $300 million. We assume that this is recovered by giving a smaller reduction in income taxes. Overall, the removal of GST on packaged holidays has a negligible, but slightly positive, net impact on the change in economic welfare flowing from the tax package. In the fourth and fifth sensitivity simulations we remove the GST from food and make a corresponding reduction in the income-tax cut offered as part of the Government's package. The fourth sensitivity simulation adopts the labour market assumption used in the central simulation (after-tax wage bargaining) while the fifth adopts the assumption used in the first sensitivity simulation (before-tax wage bargaining) . With after-tax wage bargaining, in the fourth sensitivity simulation higher income taxes stimulate wage demands. However, this effect is slightly outweighed by the lowering of food prices. The net result is a small favourable effect in the short run on employment (an increase of 38,000 jobs versus 30,000 as in the central simulation). In the fifth sensitivity simulation, the lowering of food prices continues to dampen wage demands but, with before-tax wage bargaining, the increase in income taxes has no effect. Thus, the short-run stimulatory effect on employment of exempting food from the GST is much greater with before-tax wage bargaining than with after-tax bargaining. Instead of employment decreasing in the short run by 100,000 jobs as in the first sensitivity simulation, in the fifth sensitivity simulation short-run job losses are restricted to 68,000. In the long run, exempting food has a negligible, but negative, impact on economic welfare under either labour market assumption. It should be noted that the costs of implementation, compliance, administration and rent-seeking are likely to be increased if the GST is implemented with substantial exemptions, but in all of our simulations they have been ignored. These ignored costs should be set against any benefits that we show in our simulations for the tax package, especially in assessing the benefits of exempting food. A second caution concerns the source of employment gains in the central simulation. We can think of the move from the central simulation to the fourth sensitivity simulation as combining a reduction in consumption taxes with a compensating increase in income taxes. According to the fourth sensitivity simulation this leads to an increase in employment. The question arises therefore as to how the imposition of consumption taxes combined with a reduction in income taxes generates a short-run gain in employment in the central simulation. The answer is that the tax changes in the central simulation are not balanced. Employment is stimulated in the central simulation (after-tax wage bargaining) only because the Government's tax package involves a net movement towards deficit, allowing large reductions in income taxes. More generally, in an environment of after-tax wage bargaining, the Government could achieve short-run employment gains simply by cuts in income taxes without changing indirect taxes. In the sixth sensitivity simulation we introduce different pass through rates for increases and decreases in indirect taxes. In the central simulation we assumed that all changes in indirect taxes are passed on immediately. In the sensitivity simulation we continue to assume immediate passing on of increases in consumption taxes but we assume that it will take two years to complete the passing on of reductions in taxes on inputs. The long-run effects of delayed pass through are negligible. However, the short-run effects could be quite severe. In the sensitivity simulation, a short-run effect of the package is to reduce employment by 15,000 jobs whereas in the central simulation employment in the short run increased by 30,000 jobs. As recognised by the Government, it will be important to ensure that tax reductions pass through quickly to reduced input prices. Overall, the six sensitivity simulations strengthen the finding in our December paper that the Government's proposed tax changes will have little effect on Australia's long-run macro-economic performance. They add a new dimension by illustrating two short-run down-side risks: the package will cause job losses in the short run if wage earners refuse to allow before-tax wage rates to fall relative to the CPI or if increases in indirect taxes are passed on more quickly than reductions. In motivating the tax package, particularly the introduction of the GST, the Treasury has asserted that a major change in the tax mix is necessary because the present array of indirect taxes will raise insufficient revenue to met Australia's future needs. Using a MONASH forecast simulation, we find no support for this proposition. Classification-JEL: C68, F15 Creation-Date: 1999-04 Keywords: Computable General Equilibrium Models, Economic Integration File-URL: https://www.copsmodels.com/ftp/workpapr/g-131.pdf File-Format: Application/pdf File-Function: Initial version, 1999-04 File-URL: https://www.copsmodels.com/elecpapr/g-131.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-131 Template-type: ReDIF-Paper 1.0 Title: Incorporating International Capital Ownership into the GTAP Model: Results for Asia-Pacific Trade Liberalisation Author-Name: Terrie L. Walmsley Author-X-Name-First: Terrie L. Author-X-Name-Last: Walmsley Abstract: In this paper, some major modifications are made to the existing GTAP structure and database to incorporate a long-run closure in which changes in the ownership of capital stocks are determined endogenously and income earned on endowment commodities accrues to the owners of those endowments. This long-run closure assumes that in the long run all economies are growing at a common steady-state rate of growth, determined by the rate of population and technological growth. In order to ensure valid comparative statics the underlying growth rate in the database must equal this steady-state rate of growth. Shocks are imposed to equate the growth rates of capital across regions and thus create a steady-state database. Once the GTAP model and database have been modified, they are then used to simulate the long-run effects of Asia-Pacific trade liberalisation on welfare and gross national product. It is found that the foreign ownership of assets does have a significant effect on the projected outcome of trade liberalisation in the Asia-Pacific region. Classification-JEL: C68, D33, F47 Creation-Date: 1999-04 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-72.pdf File-Format: Application/pdf File-Function: Initial version, 1999-04 File-URL: https://www.copsmodels.com/elecpapr/ip-72.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-72 Template-type: ReDIF-Paper 1.0 Title: Decomposing Simulation Results with Respect to Exogenous Shocks Author-Name: W. Jill Harrison Author-X-Name-First: W. Jill Author-X-Name-Last: Harrison Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: When a general equilibrium model is solved, there are often a large number of exogenous shocks. The change in each endogenous variable obviously depends on these different shocks. We point out a natural way of decomposing the changes (or percentage changes) in the endogenous variables as sums of the contributions made by the change in each exogenous variable. The change in any endogenous variable is exactly equal to the sum of the contributions to this change attributed to each of the exogenous variables. The contribution of a group of exogenous variables to the change (or percentage change) in any endogenous variable is defined to be the sum of the contributions of the individual exogenous variables in the group. If all the exogenous variables are partitioned into several groups that are mutually exclusive and exhaustive, the change (or percentage change) in any endogenous variable is just the sum of the contributions made by these groups. We introduce, and motivate, these decompositions in the context of a published GTAP application in which 10 regions remove import tariffs and non-tariff barriers to imports. We use the methods given in this paper to report numerical values for the contributions to the welfare gains of various regions due to tariff reductions by particular regions or groups of regions in this simulation. We show how the values obtained via the decomposition are related to the estimates in the published study of the contributions to welfare gain due to certain groups of tariff reductions. We describe a practical procedure for calculating the contributions of individual exogenous variables or groups of exogenous variables to the changes (or the percentage changes) in all of the endogenous variables. This procedure, which applies to a wide range of general equilibrium models, is now automated in GEMPACK in a version that will be made publicly available in the future. The contributions that make up the decomposition are defined as integrals. As such, they depend on the path by which the exogenous values move from their pre-simulation to post-simulation values. We propose one natural path, namely a straight line between these two points. Along this path, the ordinary rate of change is constant for each variable. Classification-JEL: C63, C68 Creation-Date: 1999-05 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-73.pdf File-Format: Application/pdf File-Function: Initial version, 1999-05 File-URL: https://www.copsmodels.com/elecpapr/ip-73.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Computational Economics, Society for Computational Economics, vol. 15(3), pages 227-249, June 2000. Handle: RePEc:cop:wpaper:ip-73 Template-type: ReDIF-Paper 1.0 Title: Tax Evasion in a Corrupt Economy Author-Name: Edimon Ginting Author-X-Name-First: Edimon Author-X-Name-Last: Ginting Abstract: Tax evasion has been studied intensively in the context of developed countries in which the institutional environment assumes a pervasive respect for the rule of law. In many developing nations such an assumption is not warranted. The objective of this paper is to develop a model of tax evasion apposite to an institutional set up in which corruption is endemic. The services of corrupt intermediaries are required by otherwise legitimate producers in order to navigate the informal 'laws' put in place by rent seekers with good connections. The model developed here posits a service providing industry which produces legitimate public services and corrupt intermediation as joint products which exploit economies of scope available to senior bureaucrats. The model can be used in various ways; in this paper a cut in the tax rate on income from capital is examined. Under certain conditions such a cut can lead to increased government revenue, giving a new explanation of how a kind of Laffer curve may operate in economies with endemic corruption. Classification-JEL: H2, O1 Creation-Date: 1999-10 File-URL: https://www.copsmodels.com/ftp/workpapr/g-133.pdf File-Format: Application/pdf File-Function: Initial version, 1999-10 File-URL: https://www.copsmodels.com/elecpapr/g-133.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-133 Template-type: ReDIF-Paper 1.0 Title: What is Assumed in the GTAP Database's Disaggregation of Labor by Skill Level? Author-Name: Gouranga Gopal Das Author-X-Name-First: Gouranga Gopal Author-X-Name-Last: Das Abstract: The 45 region by 50 commodity by 5 primary factor version of the GTAP database provides us with the splits of total labor payments into two categories, viz. skilled and unskilled labor in each sector. The decomposition of total labor payments in all sectors and all regions according to differentials in the skill content of the labor force presupposes substitution possibilities between these two categories of labor. Our interest is to explore the elasticity of substitution implicit in this disaggregation of occupation types. Given the skilled labor payment shares (as calculated from the GTAP database), we offer an ex post rationalization of them within a production-theoretic framework, thereby deriving estimates of the elasticity of substitution between skilled and unskilled labor. The adoption of a suitable nesting of skilled and unskilled labor in GTAP's production function enables us to find a 'reasonable' value for the substitution elasticity that is implicit between the two categories of labor in the GTAP database. This relies on the inter-regional covariation in the GTAP shares and in measures of educational attainment. Classification-JEL: J24, J31, O15 Creation-Date: 1999-10 Keywords: Elasticity of substitution, Educational attainment, Skilled File-URL: https://www.copsmodels.com/ftp/workpapr/ip-75.pdf File-Format: Application/pdf File-Function: Initial version, 1999-10 File-URL: https://www.copsmodels.com/elecpapr/ip-75.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-75 Template-type: ReDIF-Paper 1.0 Title: A General Equilibrium Model of Australia's Premier City Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Abstract: Australian cities suffer from urban sprawl, leading to long average commute distances and high energy use by urban transport. To investigate this problem, we define and construct a medium-sized general equilibrium model of Australia's second-largest city, Melbourne. Individuals are modelled as utility maximisers who face a discrete number of choices. We follow the logit approach, where the probability of an individual pursuing an option (for example, living in high-density housing in zone A while working in zone B) is proportional to the utility derived from that option, taking into account the cost of the option and the effect of this cost on the total utility obtainable with given income-producing opportunities. The spatial layout of the city, through the cost of travel from one zone to another, influences the pattern of land rents, industrial activity, and housing location and density. As in other general equilibrium models, market-clearing and accounting equations allow the whole economy of the city to be presented within an integrated framework. The result is a fairly general economic model of urban land use and travel demands. We use it to analyse the effects of population growth and policy initiatives on transport usage. This paper was originally presented to the Australian Conference in Applied General Equilibrium Modelling, University of Melbourne (May 1991), then published as Centre of Policy Studies Discussion Paper No. D149 (July 1991), then, retitled 'A general equilibrium model of Australia's second largest city' as IAESR working paper no. 1991/2 (September)[ https://catalogue.nla.gov.au/Record/1421228] and in 1994 published as 'A Computable General Equilibrium Model of Urban Transport Demands' in the Journal of Policy Modeling. It was reissued as CoPS/IMPACT Working Paper Number IP-74 in October 1999. Classification-JEL: C68, R14, R13 Creation-Date: 1991-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-74.pdf File-Format: Application/pdf File-Function: Initial version, 1991-07 File-URL: https://www.copsmodels.com/elecpapr/ip-74.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of Policy Modeling, Elsevier, vol. 16(4), pages 427-457, August 1994. Handle: RePEc:cop:wpaper:ip-74 Template-type: ReDIF-Paper 1.0 Title: The Measurement Of Efficiency Where There Are Multiple Outputs Author-Name: John L. Whiteman Author-X-Name-First: John L. Author-X-Name-Last: Whiteman Abstract: This paper is motivated by the empirical observation that in many studies the elasticity of output with respect to labour is often negative and/or insignificant. The present study applies multiple output models to estimate the technical efficiency of enterprises in the international electricity, gas and telecom-munications industries. The results support the contention that single output production models may yield misleading results in respect of the elasticities of inputs such as labour. The results also suggest that relatively simple DEA and ordinary least squares models may be preferred to more complex stochastic frontier models in estimating the technical efficiency of enterprises. Classification-JEL: D24, L94, L95, L96 Creation-Date: 1999-11 Keywords: multiple output, data envelopment analysis, stochastic production frontier, distance function, ray frontier, technical efficiency File-URL: https://www.copsmodels.com/ftp/workpapr/g-134.pdf File-Format: Application/pdf File-Function: Initial version, 1999-11 File-URL: https://www.copsmodels.com/elecpapr/g-134.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-134 Template-type: ReDIF-Paper 1.0 Title: Labour Supply and Welfare Participation in Australian Two-Adult Households: Comparing 1986/87 with 1994/95 Author-Name: Guyonne R. Kalb Author-X-Name-First: Guyonne R. Author-X-Name-Last: Kalb Abstract: We estimate a simultaneous discrete choice model for welfare participation and labour supply of two-adult households in Australia using the Income and Housing Costs Survey of 1994/1995. Welfare participation is assumed to have a positive indirect effect (through income) and a negative direct effect on utility. This approach allows for non-participation of eligible people. The results are compared with those from an earlier study using the 1986/1987 Income Distribution Survey. The differences are discussed in the context of policy changes affecting welfare payments and of behavioural changes as they emerge from the models. The results indicate that there is evidence of a significant disutility associated with welfare participation in both years. We also find that a change in the benefit withdrawal rate or the maximum benefit level does not seem to have a large effect on the labour supply of either adult. Classification-JEL: J22, I38 Creation-Date: 1999-12 File-URL: https://www.copsmodels.com/ftp/workpapr/bp-34.pdf File-Format: Application/pdf File-Function: Initial version, 1999-12 File-URL: https://www.copsmodels.com/elecpapr/bp-34.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:bp-34 Template-type: ReDIF-Paper 1.0 Title: Historical Simulations with the MONASH Regional Equation System Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Author-Name: Andrew Welsh Author-X-Name-First: Andrew Author-X-Name-Last: Welsh Abstract: MONASH-RES combines a top-down regional equation system with the MONASH dynamic model of Australia to produce regional forecasts or policy analysis. Experience indicates that MONASH-RES gives acceptable rankings of regional economic prospects but understates inter-regional differences. We investigate the model's properties by attempting to reproduce observed patterns of State/Territory economic performance from 1986-87 to 1993-94. Industries are classified either as national, producing commodities that are readily traded between regions, or as local, producing goods or services that are not traded between regions. Regional outputs of national industries are assumed to be independent of regional demand for them but regional outputs of local industries must meet regions' demands. The results demonstrate that MONASH-RES forecasts are improved significantly by the inclusion of region-specific macro data and accurate information about the regional distribution of output changes in national industries. They confirm that the treatment of local industries in MONASH-RES is satisfactory. Classification-JEL: D58, R11, R13 Creation-Date: 2000-10 File-URL: https://www.copsmodels.com/ftp/workpapr/op-95.pdf File-Format: Application/pdf File-Function: Initial version, 2000-10 File-URL: https://www.copsmodels.com/elecpapr/op-95.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-95 Template-type: ReDIF-Paper 1.0 Title: Applied General Equilibrium Modelling and Labour Market Forecasting Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: P.D. Adams Author-X-Name-First: P.D. Author-X-Name-Last: Adams Author-Name: J.M. Horridge Author-X-Name-First: J.M. Author-X-Name-Last: Horridge Abstract: This paper describes the application of the MONASH CGE model to labour market forecasting in Australia. The method consists of solving a top-down sequence of models that proceeds from a macro scenario to the CGE model to various labour market extensions. The extensions involve ex post processing of the MONASH results based on employment data from the census and a number of large sample surveys. Their purpose is to greatly increase the amount of information furnished by the simulations at modest additional cost, and hence to support the use of the system for analysing the efficient allocation of training resources. Classification-JEL: C68, D58, J21, J23 Creation-Date: 2000-10 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-76.pdf File-Format: Application/pdf File-Function: Initial version, 2000-10 File-URL: https://www.copsmodels.com/elecpapr/ip-76.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-76 Template-type: ReDIF-Paper 1.0 Title: Labour Supply and Welfare Participation in Australian Two-Adult Households: Accounting for Involuntary Unemployment and the 'Cost' of Part-time Work Author-Name: Guyonne R. Kalb Author-X-Name-First: Guyonne R. Author-X-Name-Last: Kalb Abstract: We estimate a simultaneous discrete choice model for welfare participation and labour supply of two-adult households in Australia using the Income and Housing Costs Survey of 1994/1995. In this paper only unemployment-related welfare payments are considered. Welfare participation is assumed to have a positive indirect effect (through income) and a negative direct effect on utility. This approach allows for non-participation of eligible people. An earlier developed labour supply and welfare participation model is extended in this paper by adding employment equations to account for involuntary unemployment. In addition, a part-time penalty term is included in the utility function to allow for monetary or non-monetary costs of working part time and the number of discrete choices is increased. The first two extensions seem to improve the model's ability to simulate the correct distribution of actual labour supply. Without these extensions, labour force non-participation is under-estimated and the number of people in part-time employment is over-estimated. The results indicate that there is evidence of a significant disutility associated with welfare participation for all specifications of the model. We also find that a change in the benefit withdrawal rate or the maximum benefit level does not seem to have a large effect on the actual labour supply of either adult. Classification-JEL: J22, I18 Creation-Date: 2000-10 File-URL: https://www.copsmodels.com/ftp/workpapr/bp-35.pdf File-Format: Application/pdf File-Function: Initial version, 2000-10 File-URL: https://www.copsmodels.com/elecpapr/bp-35.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:bp-35 Template-type: ReDIF-Paper 1.0 Title: ORANI-G: A General Equilibrium Model of the Australian Economy Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: ORANI is an applied general equilibrium (AGE) model of the Australian economy which is widely used by academics and by economists in the government and private sectors. We describe a generic version of the model, ORANI-G, designed both for expository purposes and as a convenient starting-point for those wishing to construct their own AGE model. ORANI-G forms the basis of an annual modelling course, and has been adapted to build models of South Africa, Pakistan, Sri Lanka, Fiji, South Korea, Denmark, Vietnam, Thailand, Indonesia, Philippines and both Chinas. Our description of the model's equations and database is closely integrated with an explanation of how the model is solved. Indeed, the model equations are presented in the syntax, resembling ordinary algebraic notation, used by the GEMPACK modelling system to specify the model. The document includes: an outline of the structure of the model and of the appropriate interpretations of the results of comparative-static and forecasting simulations; a description of the solution procedure; a brief description of the data, emphasising the general features of the data structure required for such a model; a complete description of the theoretical specification of the model framed around the TABLO Input file which implements the model in GEMPACK. Classification-JEL: J22, I38 Creation-Date: 2000-10 File-URL: https://www.copsmodels.com/ftp/workpapr/op-93.pdf File-Format: Application/pdf File-Function: Initial version, 2000-10 File-URL: https://www.copsmodels.com/elecpapr/op-93.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-93 Template-type: ReDIF-Paper 1.0 Title: MMRF-GREEN: A Dynamic, Multi-Sectoral, Multi-Regional Model of Australia Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Abstract: This paper presents an overview of the Monash Multi-Regional Forecasting-Green (MMRF-Green) model. MMRF-Green is a multi-regional, multi-sectoral model of the Australian economy. It is founded on the MMR model. MMR is a comparative-static model. MMRF-Green, in contrast, is a dynamic model; capable of producing sequences of annual solutions connected by dynamic relationships. MMRF-Green also includes enhanced capabilities for environmental analysis, and a regional disaggregation facility that allows results for the eight states/territories to be disaggregated down to 57 sub-state regions. Classification-JEL: C68, R10, R13 Creation-Date: 2000-10 Keywords: multiregional, CGE, environmental, dynamics File-URL: https://www.copsmodels.com/ftp/workpapr/op-94.pdf File-Format: Application/pdf File-Function: Initial version, 2000-10 File-URL: https://www.copsmodels.com/elecpapr/op-94.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-94 Template-type: ReDIF-Paper 1.0 Title: Absorption Capacity, Structural Similarity and Embodied Technology Spillovers in a 'Macro' Model: An Implementation Within the GTAP Framework Author-Name: Gouranga Gopal Das Author-X-Name-First: Gouranga Gopal Author-X-Name-Last: Das Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: In this paper, all technology transfers are embodied in trade flows within a three-region, one-traded-commodity version of the GTAP model. Exogenous Hicks-Neutral technical progress in one region can have uneven impacts on productivity elsewhere. Why? Destination regions' ability to harness new technology depends on their absorptive capacity and on the structural congruence of the source and destination. Together with trade volume, these two factors determine the recipient's spillover coefficient (which measures its success in capturing foreign technology). Armington competition between the outputs of the three economies and shifts in their terms of trade loom large in the general equilibrium adjustment. Classification-JEL: D58, F11, F41, O49 Creation-Date: 2000-12 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-77.pdf File-Format: Application/pdf File-Function: Initial version, 2000-12 File-URL: https://www.copsmodels.com/elecpapr/ip-77.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-77 Template-type: ReDIF-Paper 1.0 Title: Developing a Cost of Capital Module for Computable General Equilibrium Modelling Author-Name: Ashley Winston Author-X-Name-First: Ashley Author-X-Name-Last: Winston Abstract: This paper outlines two potential approaches to incorporating business taxation and allowances into a model of a firm to determine the effect of tax policy changes on the firm's behaviour. Following Auerbach, King and Benge, we first develop a model in which the firm maximises the value of its shareholder equity, taking account of: company and personal income taxes; capital-gains taxes (including a treatment of realisation-based capital-gains tax); depreciation allowances; investment allowances; and interest rates on debt linked to financial leverage. This approach takes the revenue streams and income payments generated by the firm as given. The second approach involves deriving a function for the user-cost of capital to the firm in an optimising framework in which the expression for the value of the firm is the objective function, and then solve for all of the firm's choice variables. In this way, the model determines the firm's optimal investment policy and the resulting levels of revenues and income streams to shareholders. By embedding this in a dynamic CGE model, we can simulate the effects of tax changes on the user-cost of capital and thus on investment. Our ultimate aim is to enable an analysis of the effects of reforms to business taxation (such as the recent Ralph proposals) using a large-scale dynamic CGE model. This is a revised version of a paper prepared for the PhD Conference in Economics and Business held at The University of Western Australia, Perth, Australia, November 7-9 2001. Classification-JEL: C68, D92, G12, G31, G32, H25 Creation-Date: 2001-12 File-URL: https://www.copsmodels.com/ftp/workpapr/op-96.pdf File-Format: Application/pdf File-Function: Initial version, 2001-12 File-URL: https://www.copsmodels.com/elecpapr/op-96.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-96 Template-type: ReDIF-Paper 1.0 Title: Introduction to GEMPACK for GAMS Users Author-Name: M. Kohlhaas Author-X-Name-First: M. Author-X-Name-Last: Kohlhaas Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: This document introduces GEMPACK to readers who are familiar with using GAMS for general equilibrium modeling. The document points out similarities and differences between GAMS and GEMPACK. The many similarities make it relatively easy for a GAMS modeler to begin using GEMPACK productively. A very basic general equilibrium model is used to illustrate the similarities and differences. Readers wishing to obtain hands-on experience with GEMPACK can find detailed instructions for running this model in GEMPACK using the free Demonstration Version. Both the model and the GEMPACK software can be downloaded from the web. Classification-JEL: C68, C88 Creation-Date: 2002-04 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-79.pdf File-Format: Application/pdf File-Function: Initial version, 2002-04 File-URL: https://www.copsmodels.com/elecpapr/ip-79.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-79 Template-type: ReDIF-Paper 1.0 Title: A Practical Method for Explicitly Modeling Quotas and Other Complementarities Author-Name: W. Jill Harrison Author-X-Name-First: W. Jill Author-X-Name-Last: Harrison Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: To make CGE models realistic, we sometimes need to include inequality constraints (eg, import quotas) or non-differentiable functions (eg, income tax schedules). Both situations may be described using complementarity conditions, which state that either an equation is true or its complementary variable is at a boundary value. The paper describes a practical way to solve CGE models, which contain such conditions. The technique, which is different from complementarity algorithms commonly used elsewhere (eg GAMS), has been implemented for the next version of the GEMPACK system. In the Euler (and similar) methods used by GEMPACK, derivatives are calculated to work out the approximate effects of exogenous changes. To get more accuracy, we can divide exogenous changes into several smaller steps. We interpret this procedure as a path-following algorithm. If all equations in the model are smooth (have continuous derivatives) we can always choose sufficiently many steps to be sure that approximation errors are a smooth and decreasing function of the number of steps. At this point we can invoke extrapolation procedures which use results from, say, Euler computations of 10, 15 and 20 steps, to compute results which are as accurate as machine precision allows. The extrapolation also allows us to compute error bounds for our computation. Unfortunately, complementarity conditions are equivalent to kinked schedules; they contain points where derivatives change sharply. The lack of smoothness precludes the use of extrapolation. Without extrapolation, very many tiny Euler steps might be needed to ensure sufficient accuracy -- leading to unacceptably lengthy computations. Our paper describes one way of overcoming this problem. The key insight is that if we knew in advance which constraints would be binding in the accurate solution, the complementarity conditions could be reformulated in terms of smooth functions only, via a closure change which allows us to ignore the troublesome equations. With all remaining functions smooth, extrapolation again becomes effective. This leads to a two-pass procedure. First, a single Euler computation, of limited accuracy, is used to discover which constraints will finally bind. Using this information the equations are recast into an equivalent smooth system which is then solved accurately. Similar methods have been used in Australia and elsewhere for years. They are simple and intuitive -- but tedious and difficult to implement manually, especially where many complementarity conditions interact. GEMPACK now offers a syntax for expressing complementarity conditions in a standard way. This enables the software to take over the boring work: running the approximate simulation, making the closure change and identifying target values for the newly exogenous variables, and finally re-solving accurately. We illustrate the technique with WAYANG, a SAM-based CGE model of Indonesia. Here, import quotas yield large rents to some richer households. We expect that removing the quotas should improve income distribution. However, the simulation results contain some surprises. Classification-JEL: C68 Creation-Date: 2002-04 Keywords: complementarity, applied general equilibrium, quotas, tariff-rate quotas, inequality constraints, algorithm File-URL: https://www.copsmodels.com/ftp/workpapr/ip-78.pdf File-Format: Application/pdf File-Function: Initial version, 2002-04 File-URL: https://www.copsmodels.com/elecpapr/ip-78.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Computational Economics, Society for Computational Economics, vol. 23(4), pp 325-341, June 2004. Handle: RePEc:cop:wpaper:ip-78 Template-type: ReDIF-Paper 1.0 Title: Rational Expectations for Large Models: A Practical Algorithm and a Policy Application Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Mark R. Picton Author-X-Name-First: Mark R. Author-X-Name-Last: Picton Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: This paper describes a practical and conceptually simple iterative method for solving large dynamic CGE models under rational expectations. Details are given for the MONASH model of Australia but the general approach could be applied to a wide range of dynamic models. The method has been automated in the RunMONASH Windows software. This software provided a natural starting point for developing an automated procedure for conducting policy analysis under rational expectations because it already performed this function for static expectations. RunMONASH was also convenient because it incorporates comprehensive user-friendly data- and solution-interrogation facilities. We provide an illustrative application in which MONASH results obtained under rational expectations for the effects of motor vehicle tariff cuts are compared with results obtained under static expectations. Classification-JEL: C53, C63, C68, F14 Creation-Date: 2002-05 Keywords: classifications: rational expectations algorithm, dynamic general equilibrium,tariffs, investment modelling File-URL: https://www.copsmodels.com/ftp/workpapr/ip-81.pdf File-Format: Application/pdf File-Function: Initial version, 2002-05 File-URL: https://www.copsmodels.com/elecpapr/ip-81.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-81 Template-type: ReDIF-Paper 1.0 Title: Cobb-Douglas Utility - Eventually! Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Author-Name: Keith R. McLaren Author-X-Name-First: Keith R. Author-X-Name-Last: McLaren Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Maureen T.Rimmer Author-X-Name-First: Maureen Author-X-Name-Last: T.Rimmer Abstract: Consider the following two opinions, both of which can be found in the literature of consumer demand systems: (a) As the real income of a consumer becomes indefinitely large, re-mixing the consumption bundle becomes irrelevant: having chosen the ultimately satisfying budget shares at any given set of relative prices, the superlatively wealthy continue to allocate additional income in the same proportions. With very large and increasing per capita income, ultimately the utility function becomes indistinguishable from Cobb-Douglas. (b) Consumer demand systems in which the income elasticities monotonically approach one (from above, in the case of luxuries; from below, in the case of necessities) are unsatisfactory both theoretically and empirically. For instance, a necessity with a low (less than 1) income elasticity may very well become less elastic with further increases in income. The issue is important for CGE modelers because explicit direct additivity (as in the linear expenditure system [LES]) is often the modeler's default choice: this leaves us firmly in the world of (a). Hanoch's implicit direct additivity exhibits very flexible Engel properties. Rimmer and Powell's AIDADS system belongs to this class. Within such a system it is possible to satisfy the motivations underlying both (a) and (b), as illustrated by the Engel (income) elasticities for a 3-commodity AIDADS system shown in Figure 1 below. Whilst the system eventually converges to Cobb-Douglas, some income elasticities can be effectively zero at any imaginable actual income level. Inferiority can also be accommodated over a range of incomes. This paper discusses the above in more detail, strengthening the case for implicit direct additivity. An experimental calibration of a database to the AIDADS system is illustrated with modifications made to the ORANI-G teaching model. A technical appendix establishes the effectively global regularity of AIDADS. Related computer files may be found here. Classification-JEL: C68, D12 Creation-Date: 2002-06 Keywords: consumer demand system, applied general equilibrium, separability, implicitly directly additive preferences, effectively global regularity, Cobb-Douglas, calibration, AIDADS File-URL: https://www.copsmodels.com/ftp/workpapr/ip-80.pdf File-Format: Application/pdf File-Function: Initial version, 2002-06 File-URL: https://www.copsmodels.com/elecpapr/ip-80.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-80 Template-type: ReDIF-Paper 1.0 Title: Explaining a dynamic CGE simulation with a trade-focused back-of-the-envelope analysis: the effects of eCommerce on Australia Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: This paper was written in honour of Peter J. Lloyd on the occasion of his retirement and celebrates his preeminence as a theorist and practitioner of the economics of international trade. Besides a surprising number of leading trade theorists, Australia has added significantly to empirical work on trade issues via applied general equilibrium models, especially the ORANI and MONASH models. This paper focuses on one intriguing new topic, namely, the welfare and other economy-wide effects of the development of eCommerce. The direct effects of eCommerce are presented to the Monash model as shocks to 14 sets of technology, preference and trade variables. The shocks were suggested in group discussions with people knowledgeable in the operation of eCommerce and drawn from the sectors most likely to be affected by it. On the conservative assumptions made about the size of the shocks, eCommerce will after about 10 years allow a sustained increase in private and public real consumption of about 3 per cent. This and other results of the MONASH simulation are explained with the help of a relatively simple and small BOTE (back-of-the-envelope) model. Classification-JEL: D58, L81 Creation-Date: 2002-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-136.pdf File-Format: Application/pdf File-Function: Initial version, 2002-12 File-URL: https://www.copsmodels.com/elecpapr/g-136.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-136 Template-type: ReDIF-Paper 1.0 Title: Drought, Regions and the Australian Economy between 2001-02 and 2004-05 Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: John Madden Author-X-Name-First: John Author-X-Name-Last: Madden Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: During the latter part of 2002 large areas of Australia have been affected by severe drought. In this paper, we examine the prospects for the Australian economy between 2001-02 and 2004-05, with particular emphasis on the implications of the drought for regions. Forecasts that take into account the drought and an assumed recovery are undertaken with the MONASH model. Year-on-year forecasts are provided for macro and micro variables at the national level. The paper then reports on simulations of the regional effects of the drought, undertaken with a new multiregional model, TERM. Detailed effects of the drought for the model's 45 regions are reported. The drought is estimated to lower 2002-03 GDP by 1.6 per cent and employment by 0.8 per cent. All mainland states are negatively affected. Eleven of the model's 45 regions are projected to have their GRPs lowered by more than 10 per cent by the drought, with a further seven regions being projected to have their GRPs lowered by between 5 and 10 per cent. Classification-JEL: C68, Q10, R13 Creation-Date: 2002-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-135.pdf File-Format: Application/pdf File-Function: Initial version, 2002-12 File-URL: https://www.copsmodels.com/elecpapr/g-135.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-135 Template-type: ReDIF-Paper 1.0 Title: Estimating the effects of China's Accession to the World Trade Organisation Author-Name: Yin Hua Mai Author-X-Name-First: Yin Hua Author-X-Name-Last: Mai Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Frances Perkins Author-X-Name-First: Frances Author-X-Name-Last: Perkins Abstract: Accession to the World Trade Organization (WTO) marks a new era in China's economic reform. In this new era, state capital will lose its dominance of pillar industries such as iron and steel, automobile, petrochemicals, non-ferrous metal, insurance, telecommunication, banking, wholesale, and utilities. This study uses a computable general equilibrium model of China to estimate the economic benefits from China opening its pillar industries to private foreign and domestic capital. The study anticipates that lowering direct entry barriers to private capital will boost productivity by encouraging new competition and foreign direct investment (FDI) inflows into these industries. In this study, the productivity gains from lowering direct entry barriers to FDI and domestic private capital are empirically estimated through a historical simulation of opening the light manufacturing industries. The opening of the light manufacturing industries to private capital happened in the early 1990s following a major policy shift marked by Deng Xiaoping's southern tour. From 1992, this policy shift led to a surge in China's inward FDI flows. The productivity gains estimated from the historical simulation are then used to simulate the opening of the pillar industries following China's WTO entry in 2001. As a result of the expected productivity gains in these pillar industries, this study concludes that WTO accession will not adversely affect production and employment in the pillar manufacturing industries, such as the automobile and parts industry. This result contrasts with the findings of most general equilibrium analyses of China's WTO entry that focus on the removal of tariffs and non-tariff barriers to merchandise trade. In the long term, productivity gains related to WTO accession should place China in a position to become an important production base for capital-intensive manufactured products as well as light manufacturing. Classification-JEL: O53, F15, D58 Creation-Date: 2003-04 Keywords: China WTO, SOEs, investment liberalization, pillar industries File-URL: https://www.copsmodels.com/ftp/workpapr/g-137.pdf File-Format: Application/pdf File-Function: Initial version, 2003-04 File-URL: https://www.copsmodels.com/elecpapr/g-137.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-137 Template-type: ReDIF-Paper 1.0 Title: Measuring Contributions to the Australian Economy: The Benefits of a Fast-Growing Motor Vehicle and Parts Industry Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: The contribution of an industry to the economy is often measured by an input-output calculation showing labour used directly in the industry and indirectly via the production of intermediate inputs for the industry. This paper demonstrates an alternative approach based on simulations with a dynamic computable general equilibrium model. Rather than measuring contribution in terms of resources used, we look at the potential contribution of an industry in terms of the effect on economic welfare of improved performance. We apply our methodology to the Australian motor vehicle industry by simulating the impact that this industry could make if it were to achieve higher productivity growth, higher export growth and the production of cars of greater appeal to Australian consumers. Classification-JEL: C67, C68 Creation-Date: 2003-05 Keywords: industry contribution, dynamic CGE analysis, input-output analysis, motor vehicle industry File-URL: https://www.copsmodels.com/ftp/workpapr/g-138.pdf File-Format: Application/pdf File-Function: Initial version, 2003-05 File-URL: https://www.copsmodels.com/elecpapr/g-138.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Economic Papers, The Economic Society of Australia, vol. 23(1) 2004, pages 73-87, 03. Handle: RePEc:cop:wpaper:g-138 Template-type: ReDIF-Paper 1.0 Title: State-level Dynamic CGE Modeling for Forecasting and Policy Analysis Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: In computable general equilibrium (CGE) modeling there are two broad approaches to generating regional results: bottoms-up and tops-down. We describe both, providing illustrative examples from our experience in Australia. We then describe USAGE, a 500-order dynamic CGE model of the US that we are developing in collaboration with the US International Trade Commission. Tops-down State results from USAGE will be available in a relatively short time. With a longer time horizon, it will be possible to create a bottoms-up version of USAGE. Tops-down applications will be adequate for analysis of economy-wide shocks such as changes in Federal policies. Bottoms-up modeling will be required for analysis of shocks in which the essence is a change in relative costs across regions. Classification-JEL: D58 Creation-Date: 2003-08 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-82.pdf File-Format: Application/pdf File-Function: Initial version, 2003-08 File-URL: https://www.copsmodels.com/elecpapr/ip-82.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-82 Template-type: ReDIF-Paper 1.0 Title: Analysing the Economic Impacts of a Plant Disease Incursion Using a General Equilibrium Approach Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Author-Name: Simon McKirdy Author-X-Name-First: Simon Author-X-Name-Last: McKirdy Author-Name: Ryan Wilson Author-X-Name-First: Ryan Author-X-Name-Last: Wilson Abstract: This study uses a dynamic multi-regional computable general equilibrium (CGE) model to estimate the micro- and macroeconomic effects of a hypothetical disease outbreak. The extent of the incursion, the impact of the disease on plant yields, the response of buyers, the costs of eradication and the time path of the scenario contribute to outcomes at the industry, regional, state and national levels. We also decompose the contribution of these individual direct effects to the overall impact of the disease. This may provide some guidance as to areas for priority in attempting to eradicate or minimise the impacts of a disease. Classification-JEL: D58, Q16, R13 Creation-Date: 2003-09 File-URL: https://www.copsmodels.com/ftp/workpapr/op-97.pdf File-Format: Application/pdf File-Function: Initial version, 2003-09 File-URL: https://www.copsmodels.com/elecpapr/op-97.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Australian Journal of Agricultural and Resource Economics 49(1):75-89, January(2005). DOI: 10.1111/j.1467-8489.2005.00276.x Handle: RePEc:cop:wpaper:op-97 Template-type: ReDIF-Paper 1.0 Title: RunMONASH: Automating A Dynamic, Recursive CGE Model Author-Name: Jill Harrison Author-X-Name-First: Jill Author-X-Name-Last: Harrison Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: RunMONASH, a software program, written by Ken Pearson, is used to solve the CGE model, MONASH. RunMONASH produces a base case forecast for a set of years in sequence. In response to some additional policy shocks, RunMONASH calculates a policy deviation from this base case, again for the same sequence of years. This paper outlines the reasons for writing RunMONASH and the basic ideas of the solution method. It gives an overview of the dynamic CGE models for which RunMONASH can be used. A brief introduction to the Screen interface is included. However, the main documentation of RunMONASH is the Online Help file that accompanies the software. Classification-JEL: C68, C61 Creation-Date: 2003-10 Keywords: dynamic CGE model, GEMPACK software File-URL: https://www.copsmodels.com/ftp/workpapr/c14.pdf File-Format: Application/pdf File-Function: Initial version, 2003-10 File-URL: https://www.copsmodels.com/elecpapr/c14.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:c14 Template-type: ReDIF-Paper 1.0 Title: Small-change Computations of Price and Quantity Indices Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: This document compares several methods of computing price and quantity indices, with special reference to the small-change computations used by GEMPACK. It also discusses the problem of 'path-dependence' that might arise when using change equations which have no corresponding levels form. Accompanying worked examples, using Excel and GEMPACK, can be downloaded from item TPMH0049 in the CoPS archive. Classification-JEL: C43, E31, O47 Creation-Date: 2003-10 Keywords: Price Index, Quantity Index, Divisia, Path Dependence File-URL: https://www.copsmodels.com/ftp/workpapr/c13.pdf File-Format: Application/pdf File-Function: Initial version, 2003-10 File-URL: https://www.copsmodels.com/elecpapr/c13.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:c13 Template-type: ReDIF-Paper 1.0 Title: Using a highly disaggregated multi-regional single-country model to analyse the impacts of the 2002-03 drought on Australia Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: John Madden Author-X-Name-First: John Author-X-Name-Last: Madden Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: TERM (The Enormous Regional Model) is a "bottom-up" CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disag-gregated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regional impacts of shocks that may be region-specific. We include some details of how we prepared the TERM database, using a national input-output table, together with regional data showing output (for agriculture) and employment (in other sectors) for each of 144 sectors and 57 regions [the Australian statistical divisions]. Using a 38-sector, 45-region aggregation of the model, we simulate the short-run effects of the Australian drought of 2002-03, which was the most widespread for 20 years. The effects on some statistical divisions are extreme, with income losses of up to 20 per cent. Despite the relatively small share of agriculture in Australian GDP, the drought reduces GDP by 1.6 per cent, and contributes to a decline in unemployment and to a worsening of the balance of trade. Classification-JEL: D58, R13, N57, O13 Creation-Date: 2003-10 File-URL: https://www.copsmodels.com/ftp/workpapr/g-141.pdf File-Format: Application/pdf File-Function: Initial version, 2003-10 File-URL: https://www.copsmodels.com/elecpapr/g-141.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of Policy Modeling, Vol 27/3 2005, pp. 285-308. Handle: RePEc:cop:wpaper:g-141 Template-type: ReDIF-Paper 1.0 Title: MMRF-GREEN: A Dynamic Multi-Regional Applied General Equilibrium Model of the Australian Economy, Based on the MMR and MONASH Models Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: This is a guide to the variable dimension version of MMRF-GREEN, a dynamic multi-regional, fiscal model of the economy of Australia. We first detail the multi-regional core of the model. Then we introduce dynamics to the model. A section on the fiscal extension of the model follows. A subsequent section details enhancements designed to improve the model's capability for environmental analysis. Classification-JEL: D58, R13 Creation-Date: 2003-10 File-URL: https://www.copsmodels.com/ftp/workpapr/g-140.pdf File-Format: Application/pdf File-Function: Initial version, 2003-10 File-URL: https://www.copsmodels.com/elecpapr/g-140.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-140 Template-type: ReDIF-Paper 1.0 Title: Effects of Reducing Tariffs and Endogenous Productivity Growth Author-Name: Yin Hua Mai Author-X-Name-First: Yin Hua Author-X-Name-Last: Mai Abstract: In this study, the effects of China's WTO commitments of reducing tariff and non-tariff barriers are analysed using a Computable General Equilibrium (CGE) model of China. In particular, this study draws the attention of policy makers to a different regional employment outcome when trade-liberalisation induced productivity improvements are taken into account. Trade-liberalisation induced productivity improvements occur when local producers survive import competition by seeking (most likely importing) input-saving technologies and production practice. Such endogenous productivity improvements, based on empirical estimates, are endogenously represented in the model. Classification-JEL: D58, F14, O53 Creation-Date: 2003-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-139.pdf File-Format: Application/pdf File-Function: Initial version, 2003-12 File-URL: https://www.copsmodels.com/elecpapr/g-139.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-139 Template-type: ReDIF-Paper 1.0 Title: Why do some countries save more than others? Author-Name: Shusaku Yamamoto Author-X-Name-First: Shusaku Author-X-Name-Last: Yamamoto Abstract: Some countries have the resources and capacity to save more than the other countries. This paper analyses the determinants of annual saving. The analysis uses the optimal saving function which is derived from the household inter-temporal utility maximisation. The predictions from the comparative statics are compared with micro survey data in Japan and the US. In addition, the preference of inter-temporal consumptions is estimated. These comparisons and estimations suggest that higher annual saving could be explained by higher income, lower interest rates, shorter saving spans, longer retirement spans, and higher preference for retirement-span consumption. Classification-JEL: D11, D12, D91, E21 Creation-Date: 2004-02 File-URL: https://www.copsmodels.com/ftp/workpapr/g-142.pdf File-Format: Application/pdf File-Function: Initial version, 2004-02 File-URL: https://www.copsmodels.com/elecpapr/g-142.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-142 Template-type: ReDIF-Paper 1.0 Title: The US economy from 1992 to 1998: historical and decomposition simulations with the USAGE model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: USAGE is a 500 industry dynamic computable general equilibrium model of the US economy being developed at Monash University in collaboration with the US International Trade Commission. In common with the MONASH model of Australia, USAGE is designed for four modes of analysis: Historical, where we estimate changes in technology and consumer preferences; Decomposition, where we explain periods of economic history in terms of driving factors such as changes in technology and consumer preferences; Forecast, where we derive basecase forecasts for industries, occupations and regions that are consistent with trends from historical simulations and with available expert opinions; and Policy, where we derive deviations from basecase forecast paths caused by assumed policies. This paper reports our first set of historical and decomposition results. The historical results quantify several aspects of technical change in US industries for the period 1992 to 1998 including: intermediate-input-saving technical change; primary-factor-saving technical change; labor-capital bias in technical change; and import-domestic bias in technical change. The historical results also quantify shifts in consumer preferences between commodities. The decomposition results are applied in illustrative analyses of growth in US international trade between 1992 and 1998 and of growth in the US steel industry for this period. Classification-JEL: C68, D58, F14 Creation-Date: 2003-10 File-URL: https://www.copsmodels.com/ftp/workpapr/g-143.pdf File-Format: Application/pdf File-Function: Initial version, 2003-10 File-URL: https://www.copsmodels.com/elecpapr/g-143.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-143 Template-type: ReDIF-Paper 1.0 Title: The US economy from 1992 to 1998: results from a detailed CGE model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: This paper describes historical and decomposition simulations undertaken for 1992 to 1998 with a 500-sector CGE model of the US. The historical simulation provides estimates of movements in unobservable technology and preference variables. The decomposition simulation explains developments in the US economy in terms of movements in these variables and in observable exogenous variables such as tariffs. Both simulations produce many results. Here we use decomposition results to show that rapid growth in US international trade is explained mainly by technology changes that reduced costs in export-oriented industries and increased inputs of commodities are heavily imported. Classification-JEL: C68, F14 Creation-Date: 2004-04 File-URL: https://www.copsmodels.com/ftp/workpapr/g-144.pdf File-Format: Application/pdf File-Function: Initial version, 2004-04 File-URL: https://www.copsmodels.com/elecpapr/g-144.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in The Economic Record, The Economic Society of Australia, vol. 80(s1) 2004, pages S13-S23, 09. Handle: RePEc:cop:wpaper:g-144 Template-type: ReDIF-Paper 1.0 Title: Disaggregation of results from a detailed general equilibrium model of the US to the State level Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: This paper describes the regional extension of USAGE-ITC, a 500-order dynamic CGE model of the US that we are developing in collaboration with the International Trade Commission. With the regional extension, USAGE-ITC can project the effects on employment and output by state of policy and other shocks to the economy. The paper describes the theory and data underlying the regional extension, and provides an illustrative application concerned with the effects of elimination of US restraints on imports. In CGE modeling there are two broad approaches to generating regional results: bottoms-up and tops-down. Our approach here is tops-down with emphasis on the estimation of inter-regional flows of goods and services. As explained in the paper, the tops-down approach is adequate for analysis of economy-wide shocks such as changes in Federal policies. Bottoms-up modeling will be required for analysis of shocks in which the essence is a change in relative costs across regions. Classification-JEL: C68, D58, F14, R1 Creation-Date: 2004-04 File-URL: https://www.copsmodels.com/ftp/workpapr/g-145.pdf File-Format: Application/pdf File-Function: Initial version, 2004-04 File-URL: https://www.copsmodels.com/elecpapr/g-145.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-145 Template-type: ReDIF-Paper 1.0 Title: Macro, industry and state effects in the U.S. of removing major tariffs and quotas Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Marinos E. Tsigas Author-X-Name-First: Marinos E. Author-X-Name-Last: Tsigas Abstract: We use a 500-industry CGE model of the U.S. to simulate the macro, industry and state effects of removing major U.S. tariffs and quotas. We find that this would generate a welfare gain of 0.07 per cent. For most industries, the output change would be negligible but for sugar, butter and several textile industries output contractions would be large. The state employment changes are all between -0.5 and 0.2 per cent. We explain the results by elementary mechanisms, in a way that does not require prior knowledge of the underlying CGE model. Classification-JEL: C68, R13, F14 Creation-Date: 2004-06 File-URL: https://www.copsmodels.com/ftp/workpapr/g-146.pdf File-Format: Application/pdf File-Function: Initial version, 2004-06 File-URL: https://www.copsmodels.com/elecpapr/g-146.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-146 Template-type: ReDIF-Paper 1.0 Title: The Effects of a Free Trade Agreement Between the USA and the South African Customs Union (SACU) Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Abstract: This paper documents analysis of the economic effects of the proposed SACU/USA free trade agreement using a specially-built dynamic version of the GTAP world general equilibrium model. At the core of the new model is the standard GTAP Version 6.0 framework, released in April 2001. Onto this basis we add the following. * A series of new variables representing useful aggregates of primary agricultural and agriculture-related sectoral outputs, exports and imports. These do not alter the basic theory of GTAP in any way and are merely defined for convenience. * New variables and equations which furnish GTAP with simple dynamic behaviour. These allow us to run linked annual GTAP simulations for each year between 1997 and 2023. For each region, the new equations: (a) link net investment in each year to the change in the capital stock for that year; (b) allow employment to respond temporarily to changes in real wage rates; and (c) allow rates of return to capital to respond temporarily to changes in demands for capital. In the long run, all 3 dynamic equations reduce to simpler forms: investment moves in proportion to capital stock; and employment and rates of return converge to baseline trend levels. Seven scenarios are modelled. The first is a baseline projection. The baseline is a sequence of annual forecasts for the global economy, constructed using external forecasts for macro variables and for rates of import protection and export subsidies. In effect, the baseline shows what might be expected to happen if there were no free trade agreement between the SACU and the USA. The remaining six scenarios embody various forms of the SACU/USA free trade agreement. The effects of the agreement in each of the alternative scenarios are expressed as deviations away from baseline values. Our main findings are: * Progressive cuts in protection through the ten years 2005 to 2014 lead to increased employment, increased capital and higher real wage rates in the SACU; * The effects of the agreement vary across industries. The mechanisms, however, are fairly straightforward, depending primarily on the extent to which the protection cuts exposes sectors to additional import competition and on each sector's export orientation. * From the SACU's point of view the free trade agreement is trade creating, with little evidence of increased trade diversion. Classification-JEL: C68, F15 Creation-Date: 2004-07 Keywords: Multiregional, CGE, trade, liberalisation, dynamics File-URL: https://www.copsmodels.com/ftp/workpapr/g-147.pdf File-Format: Application/pdf File-Function: Initial version, 2004-07 File-URL: https://www.copsmodels.com/elecpapr/g-147.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-147 Template-type: ReDIF-Paper 1.0 Title: The Effects of a Free Trade Agreement Between Australia and the USA with Special Reference to the Victorian Economy: Main Report Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Abstract: This paper documents analysis of the economic effects of the proposed free trade agreement between Australia and the USA using a specially-built dynamic version of the GTAP world general equilibrium model. At the core of the new model is the standard GTAP Version 6.0 framework, released in April 2001. Onto this basis we add the following. * A series of new variables representing useful aggregates of primary agricultural and agriculture-related sectoral outputs, exports and imports. These do not alter the basic theory of GTAP in any way and are merely defined for convenience. * New variables and equations which furnish GTAP with simple dynamic behaviour. These allow us to run linked annual GTAP simulations for each year between 1997 and 2023. For each region, the new equations: (a) link net investment in each year to the change in the capital stock for that year; (b) allow employment to respond temporarily to changes in real wage rates; and (c) allow rates of return to capital to respond temporarily to changes in demands for capital. In the long run, all 3 dynamic equations reduce to simpler forms: investment moves in proportion to capital stock; and employment and rates of return converge to baseline trend levels. * A tops-down regional disaggregation facility which allows results at the national level for output and employment to be disaggregated first to the state/territory level and then to the level of 56 sub-state regions. In reporting our results we concentrate on findings for the Victorian economy and for its eleven sub-state regions. Our main findings are: * Cuts in protection associated with the FTA lead to increased employment, increased capital and higher real wage rates in Australia and the USA; * The effects of the agreement vary across industries. The mechanisms, however, are fairly straightforward, depending primarily on the extent to which the protection cuts exposes sectors to additional import competition and on each sector's export orientation. * The states that gain most from the FTA are Queensland, Western Australia and Tasmania. The states that gain least are Victoria and South Australia. However, it should be noted that all states gain, and that the difference between the increase in real GSP for the state that gains most (Western Australia) and the state that gains least (Victoria) is only 0.09 percentage points. * An implication of our regional methodology is that regions with an over-representation of favourably affected "national" industries gain at the expense of regions with an under-representation of such industries. Victoria gains least because it is over-represented in industries least favourably affected by the FTA. Prominent among these is Motor vehicles. * In the long-run year, the Victorian sub-state regions that gain most from the FTA are the Western District (real GRP up 0.47 per cent c.f. an increase in Victoria's real GSP of 0.13 per cent), Wimmera (real GRP up 0.39 per cent), Goulbourn (0.38 per cent) and the Mallee (0.37 per cent). All regions are projected to experience increased real GSP as a result of the FTA, but Melbourne and Barwon are expected to expand least. In terms of employment, the FTA results in net job loss in Melbourne and Barwon. Classification-JEL: C68, , F15, , R13 Creation-Date: 2003-12 Keywords: Multiregional, CGE, trade, liberalisation, dynamics File-URL: https://www.copsmodels.com/ftp/workpapr/g-148.pdf File-Format: Application/pdf File-Function: Initial version, 2003-12 File-URL: https://www.copsmodels.com/elecpapr/g-148.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-148 Template-type: ReDIF-Paper 1.0 Title: Modelling Manufactured imports: Methodological Issues with Evidence From Australia Author-Name: Premachandra Athukorala Author-X-Name-First: Premachandra Author-X-Name-Last: Athukorala Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: This paper investigates the relationship between manufactured import flows to Australia, and relative prices and domestic economic activity net of cyclical demand effects over the period 1981Q3 to 1991Q2. This is done through the estimation of import demand functions for total manufactured imports and nine major import categories using the general to specific modeling approach. We find that the homotheticity assumption on activity elasticity is met in most cases. The price elasticity estimates for individual categories range from 0.32 to 2.1, with a weighted-average of 0.52. We also find some evidence of upward bias in price elasticity estimates when an aggregate import function is employed in a context where a significant portion of imports are subject to quantitative restrictions (QRs). Classification-JEL: F32, F17 Creation-Date: 1995-04 File-URL: https://www.copsmodels.com/ftp/workpapr/g-112.pdf File-Format: Application/pdf File-Function: Initial version, 1995-04 File-URL: https://www.copsmodels.com/elecpapr/g-112.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-112 Template-type: ReDIF-Paper 1.0 Title: Measures of Intra-Industry Trade as Indicators for Factor Market Disruption Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: Intra-industry trade (IIT) related concepts have often been used as indicators of the extent to which trade growth can be accommodated without factor market disruption. The most commonly used indicators have been movements in the Grubel-Lloyd (GL) index. However, GL-based indicators are sometimes misleading and, at best, they give qualitative information only. We develop two other indicators. The first involves computing changes in IIT. While this method provides a precise measure of the contribution of growth in IIT to total trade (TT) growth, it tends to overestimate the contribution of non-disruptive trade growth. This problem is overcome by our second indicator, dynamic intra-industry trade or matched changes in trade. All our indicators are illustrated with data for 133 Australian manufacturing industries. Classification-JEL: F32, F17 Creation-Date: 1995-04 Keywords: intra-industry trade, matched trade, factor market disruption File-URL: https://www.copsmodels.com/ftp/workpapr/g-113.pdf File-Format: Application/pdf File-Function: Initial version, 1995-04 File-URL: https://www.copsmodels.com/elecpapr/g-113.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-113 Template-type: ReDIF-Paper 1.0 Title: The Effects of Immigration on Residents' Incomes in Australia: Some Issues Reconsidered Author-Name: Matthew W. Peter Author-X-Name-First: Matthew W. Author-X-Name-Last: Peter Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: This paper outlines the standard neoclassical model (SNM) of the impact of immigration on the incomes of the resident (pre-immigration) population. We augment the SNM to allow for foreign ownership of and government equity in the capital stock. Using the expanded model, four back-of-the-envelope (BOTE) calculations are made. The calculations reveal that the size of the Berry-Soligo welfare triangle is small and is dominated by the effects of foreign ownership of capital and government equity in capital. In our preferred scenario, the BOTE calculation indicates that the 1991-92 Australian immigrant intake reduced residents' income. We believe the results of the BOTE calculations justify a more comprehensive study incorporating a range of other influential factors determining the impact of immigration on residents' income. We suggest a list of such factors and report on work done in these specific areas. Essential to a comprehensive study are the integration of results from studies in specific areas, and the devotion of resources to the tasks of further data collection and model development. Classification-JEL: F22, D33, D60 Creation-Date: 1995-05 Keywords: immigration, residents' income, capital mobility, government equity, Berry-Soligo effect File-URL: https://www.copsmodels.com/ftp/workpapr/g-115.pdf File-Format: Application/pdf File-Function: Initial version, 1995-05 File-URL: https://www.copsmodels.com/elecpapr/g-115.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in The Australian Economic Review, vol. 29, iss. 2, 1996, pp. 171-88. Handle: RePEc:cop:wpaper:g-115 Template-type: ReDIF-Paper 1.0 Title: Economic Integration, Poverty and Regional Inequality in Brazil Author-Name: Joaquim Bento Ferreira-Filho Author-X-Name-First: Joaquim Bento Author-X-Name-Last: Ferreira-Filho Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: Gains and losses from trade liberalization are often unevenly distributed inside a country. For example, if budget shares vary according to household income, changes in commodity prices will redistribute an overall welfare change between household types. Household incomes will also be differentially affected. Sectoral differences in factor-intensity mean that changes in industrial structure cause redistribution of income between primary factors. Particular primary factors (such as capital, or less skilled labour) may contribute disproportionately to the incomes of certain household types. The fortunes of such households indirectly depend on the prospects of particular sectors. We emphasize these distributive issues, especially those arising from the income side. At the same time we distinguish households by regions (within the country). The regional distinction sharpens the contrast between groups of households. Particular regions have their own patterns of economic activity and so are differently affected by changes in the industrial protection structure. Since regional household incomes depend closely on value-added from local industries, economic change will tend to redistribute income between regional households. If the regional concentration of poverty is more than we could predict by regional primary factor endowments and industry structure, the addition of a regional dimension will add power to our analysis of income distribution beyond the mere addition of interesting regional detail. The paper deals with these issues more fully. We extend previous regional modeling of Brazil to include the intra-household dimension, addressing poverty and income distribution issues that may be caused by trade integration. An applied general equilibrium (AGE) inter-regional model of Brazil underlies our analysis, with a detailed specification of households. The model is static and solved with GEMPACK. The Representative Household (RH) hypothesis is abandoned; instead a micro-simulation (MS) model is used to track changes in household income and expenditure patterns. This micro-simulation model is built upon two Brazilian household studies: (1) the Household Budget Survey (POF, IBGE, 1999) covers detailed expenditure patterns for 16,013 households and 11 regions in Brazil in 1996; (2) the National Household Sample Survey (PNAD, IBGE, 1997) is a yearly survey that includes detailed information about household employment and income sources, with 331,263 observations. We integrate the two data sources to produce a detailed mapping of expenditure and income sources for 112,055 Brazilian households and 263,938 adults, distinguishing 42 activities, 52 commodities, and 27 regions. We link the AGE and MS models together, solving them iteratively to get consistency between results. After a shock the AGE model communicates changes in wages and employment by industry and labour type to the MS model that individually simulates the changes in employment, income and expenditure patterns for each household. The new expenditure pattern is then communicated to the AGE model, and the process is repeated until the two models converge. The final results from the MS model enable us to estimate changes in poverty and income distribution measures, both nationally and for regions within Brazil. We use the model to analyze poverty and income distribution impacts of the Free Trade Area of Americas formation upon the Brazilian economy. In the particular simulation we examine, freer trade leads to increased employment, especially for lower-paid workers. Poor households, which contain more unemployed adults, benefit most. This leads to a reduction in poverty in all 27 Brazilian states. Classification-JEL: R130, C680, C810, D310, D580, O210, O540 Creation-Date: 2004-07 Keywords: CGE microsimulation Brazil regional poverty File-URL: https://www.copsmodels.com/ftp/workpapr/g-149.pdf File-Format: Application/pdf File-Function: Initial version, 2004-07 File-URL: https://www.copsmodels.com/elecpapr/g-149.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Financas, Getulio Vargas Foundation (Brazil), vol. 60(4), pages 363-388, February 2006. Handle: RePEc:cop:wpaper:g-149 Template-type: ReDIF-Paper 1.0 Title: How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs? Author-Name: Jayant Menon Author-X-Name-First: Jayant Author-X-Name-Last: Menon Abstract: A number of recent papers have examined measures of intra-industry trade (IIT) and related indicators such as matched and unmatched changes in trade (MCIT and UCIT) as indicators of adjustment costs associated with trade expansion or contraction. We make three contributions to this literature. First, we clarify what is meant by adjustment costs in the context of these IIT-related measures. Second, we present new measures of MCIT and UCIT. Third, we compare our measures with existing measures using some simple numerical examples and data on Irish chemicals trade. We find that previous IIT-related measures tend to overestimate the extent of MCIT, and underestimate UCIT. We also find that the extent of the bias in these measures can be substantial. Thus, they are unreliable as indicators of adjustment costs. Our measures overcome these limitations. Classification-JEL: F31, F32 Creation-Date: 1996-03 Keywords: intra-industry trade, matched changes in trade, adjustment costs File-URL: https://www.copsmodels.com/ftp/workpapr/g-119.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/g-119.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-119 Template-type: ReDIF-Paper 1.0 Title: Estimates of the elasticity of substitution between imported and domestically produced goods classified at the input-output level of aggregation Author-Name: Chris M. Alaouze Author-X-Name-First: Chris M. Author-X-Name-Last: Alaouze Abstract: This empirical study of Armington elasticities between Australian domestically produced commodities and imported commodities of the same name follows directly from Alaouze, Marsden and Zeitsch [AMZ] (1977) (see Impact Project Working Paper O-11, available from this web site). In the present study the AMZ models were estimated from data constructed at the input-output [IO] (rather than the four-digit ASIC) level of aggregation. The major results obtained here are in basic agreement with those in AMZ. However, estimated substitution elasticities at this higher level of aggregation tended to be lower than those obtained in AMZ. Nevertheless, the elasticities of substitution estimated here at the IO aggregation level fell within the range of the estimates for any given IO category's ASIC components in those cases where substitution elasticities for two or more ASICs belonging to the same IO category were estimated in the AMZ study. Classification-JEL: F14, C20, C51 Creation-Date: 1977-10 File-URL: https://www.copsmodels.com/ftp/workpapr/o-13.pdf File-Format: Application/pdf File-Function: Initial version, 1977-10 File-URL: https://www.copsmodels.com/elecpapr/o-13.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:o-13 Template-type: ReDIF-Paper 1.0 Title: Modelling the effects of economy-wide shocks on a state economy in a federal system - A hybrid of the top-down and bottom-up approaches to regional modelling Author-Name: Peter J. Higgs Author-X-Name-First: Peter J. Author-X-Name-Last: Higgs Author-Name: B.R. Parmenter Author-X-Name-First: B.R. Author-X-Name-Last: Parmenter Author-Name: Russell J. Rimmer Author-X-Name-First: Russell J. Author-X-Name-Last: Rimmer Abstract: This paper describes a method for introducing more regional detail into an applied general equilibrium model than is available from the top-down approach to disaggregation. Recognizing that the complete set of inter-regional accounts is rarely available, the method described uses available data for one or more regions of interest for which the demand patterns and/or the input structures of certain industries are known not to be a close reflection of the national averages for these industries. The method splits these national industries into the part(s) located in the region(s) of interest for which detailed data are available, and the remainder. The new regionally specific industries are then treated just like any other aggregate industry recognized at the national level (but of course, their demand and/or production structures differ). Shocks specific to such regionally specific industries can now be introduced into simulations. This limited bottom-up disaggregation does not impede the use of the top-down method -- in this paper, the ORANI-LMPST method -- for disaggregating the aggregate national industries. Thus detail in simulations comes both from region-specific information (as in the bottom-up approach), as well as from top-down disaggregation. Because it incorporates more region-specific data, this hybrid method is more reliable than stand-alone use of the top-down approach. The example detailed in the paper describes the use of the hybrid method to improve disaggregated results for Tasmania (Australia's smallest State) from the ORANI national model of Australia. Classification-JEL: C68, R12, R13, R15 Creation-Date: 1983-01 File-URL: https://www.copsmodels.com/ftp/workpapr/op-37.pdf File-Format: Application/pdf File-Function: Initial version, 1983-01 File-URL: https://www.copsmodels.com/elecpapr/op-37.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-37 Template-type: ReDIF-Paper 1.0 Title: The Reconciliation of Computable General Equilibrium and Macroeconomic Modelling: Grounds for Hope? Author-Name: Bruce F. Parsell Author-X-Name-First: Bruce F. Author-X-Name-Last: Parsell Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Author-Name: Peter J. Wilcoxen Author-X-Name-First: Peter J. Author-X-Name-Last: Wilcoxen Abstract: In the aftermath of the rational expectations debate and the onslaught of the New Classical economics,some builders of macroeconometric models have begun to change some of their habits, arguably for the better. In particular,neoclassical discipline is increasingly respected in the formulation of the steady states or balanced growth solutions of the latest versions of several models (e.g., Australia's Murphy Model,and the McKibbin-Sachs Global Model). As well,the behaviour of certain variables (especially exchange rates and investment) increasingly tends to be linked to intertemporal optimization. In this paper we evaluate these innovations and illustrate the role of each,using recent simulations of the Murphy and McKibbin-Sachs models. We conclude that conditions have never been better for convergence in the two streams of economy-wide modelling. Classification-JEL: C68, E13, E37 Creation-Date: 1989-12 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-44.pdf File-Format: Application/pdf File-Function: Initial version, 1989-12 File-URL: https://www.copsmodels.com/elecpapr/ip-44.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-44 Template-type: ReDIF-Paper 1.0 Title: The MONASH-Multi-Country (MMC) Model and the Investment Liberalisation in China's Oil Industry Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Abstract: Computable general equilibrium models have been widely applied in analysing the effects of removing tariffs. However, not nearly as much effort has been devoted to their application on investment liberalisation that is increasingly an integral part of trade liberalisation agreements. The Monash-Multi-Country (MMC) model is developed to meet such policy needs. The MMC model is an advanced dynamic CGE model with bilateral investment flows between countries/regions modelled explicitly at an industry level. This paper describes the model structure and data of the MMC model. Its application is illustrated by a simulation of a potential investment liberalisation in China's oil industry. Classification-JEL: D58, F15, F21 Creation-Date: 2005-10 Keywords: China, oil industry, investment liberalisation, CGE modelling File-URL: https://www.copsmodels.com/ftp/workpapr/g-150.pdf File-Format: Application/pdf File-Function: Initial version, 2005-10 File-URL: https://www.copsmodels.com/elecpapr/g-150.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-150 Template-type: ReDIF-Paper 1.0 Title: The Extent and Consequences of Recent Structural Changes in the Australian Economy, 1997-2002: Results from Historical/Decomposition Simulations with MONASH Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Abstract: The paper describes historical and decomposition simulations of the Australian economy undertaken with the MONASH model. The simulations cover the period 1996/97 to 2001/02. The paper first describes the historical simulation. In the historical simulation, many of those sectoral variables in MONASH which represent observable features of the economy are determined exogenously. This allows the model to calculate the outcomes for sectoral variables describing (typically unobservable) features of the economy's structure, such as industry production technologies and household tastes. The estimates for these structural and taste variables play a key role in explaining the observable features of the economy over the study period. To isolate the contribution of each of these structural features to observed economic outcomes, they are fed back into the model as exogenous shocks in the decomposition simulation. The decomposition simulation is then used to explain the causes of major changes in the Australian economy over the period 1996/97 - 2001/02 in terms of changes in technologies, tastes and other structural variables. Classification-JEL: D58, O39, O47 Creation-Date: 2004-12 File-URL: https://www.copsmodels.com/ftp/workpapr/g-151.pdf File-Format: Application/pdf File-Function: Initial version, 2004-12 File-URL: https://www.copsmodels.com/elecpapr/g-151.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'The effects of recent structural, policy and external shocks to the Australian economy, 1996/97 - 2001/02', Australian Economic Papers, Vol. 47(1), March 2008, pp. 15-37. Handle: RePEc:cop:wpaper:g-151 Template-type: ReDIF-Paper 1.0 Title: The Theory of Tariff Rate Quotas: An Application to the U.S. Sugar program using MONASH-USA Author-Name: Ashley Winston Author-X-Name-First: Ashley Author-X-Name-Last: Winston Abstract: MONASH-USA (also known as USAGE-ITC) is a detailed dynamic general equilibrium model of the U.S. developed by the Centre of Policy Studies in collaboration with the U.S. International Trade Commission. This paper reports on the theoretical developments completed for a project intended to (a) add detail to the industry and commodity classification of the relevant sectors and (b) create a detailed modelling structure for the U.S. trade and industry-support policies that affect these sectors. A secondary theme of the research is the development and application of methods for modelling complementarity relationships in a large-scale general equilibrium framework. Data issues and simulation results are discussed in a second paper. Classification-JEL: C61, C63, C68, D58, F13, Q13, Q17, Q18 Creation-Date: 2005-07 Keywords: international trade, agricultural policy, sugar, commercial policy, tariff-rate quotas, complementarity relationships, dynamic general equilibrium modelling File-URL: https://www.copsmodels.com/ftp/workpapr/ip-83.pdf File-Format: Application/pdf File-Function: Initial version, 2005-07 File-URL: https://www.copsmodels.com/elecpapr/ip-83.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-83 Template-type: ReDIF-Paper 1.0 Title: Regional Macroeconomic Outcomes Under Alternative Arrangements for the Financing of Urban Infrastructure Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: Many studies have found that the economic benefits from investment in urban infrastructure are substantial. In Australia, much of the responsibility for the provision of urban infrastructure rests with regional governments. Throughout the1990's many of these governments embarked on a program of fiscal restraint, seeking to restore financial positions weakened by exposure to failed government enterprises. A large proportion of this fiscal adjustment appears to have been borne by spending on public infrastructure. Today, regional government policy attention is again focussing on public infrastructure. In spite of the now robust fiscal positions of Australia's regional governments, they remain reluctant to finance infrastructure through debt, and raising the rates of existing taxes is perceived as politically unpopular. Instead, governments are exploring alternative financing instruments, such as developer charges and public-private partnerships. This paper uses a dynamic multi-regional CGE model (MMRF) to evaluate the regional macroeconomic consequences of four methods of financing a program of regional government infrastructure provision. The methods are developer charges, debt, payroll tax and residential rates. We demonstrate that the net gains from a program of urban infrastructure development are quite sensitive to the chosen financing means. The net gains tend to be greatest under rates and debt financing, and least under developer charges. Classification-JEL: D58, R13, R51, R53 Creation-Date: 2005-01 Keywords: multi-regional CGE, dynamic CGE, infrastructure finance,regional policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-152.pdf File-Format: Application/pdf File-Function: Initial version, 2005-01 File-URL: https://www.copsmodels.com/elecpapr/g-152.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Papers in Regional Science, Vol 87(1), March 2008, pp. 3-31. Handle: RePEc:cop:wpaper:g-152 Template-type: ReDIF-Paper 1.0 Title: Modelling the Potential Benefits of an Australia-China free Trade Agreement Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Author-Name: Mingtai Fan Author-X-Name-First: Mingtai Author-X-Name-Last: Fan Author-Name: Ronglin Li Author-X-Name-First: Ronglin Author-X-Name-Last: Li Author-Name: Zhaoyang Zheng Author-X-Name-First: Zhaoyang Author-X-Name-Last: Zheng Abstract: In this study, we simulated three potential scenarios of an Australia-China Free Trade Agreement (FTA): removal of border protection on merchandise trade, investment facilitation, and removal of barriers to services trade. The analytical framework is a multi-country, multi-sector computable general equilibrium model, the Monash-Multi-Country (MMC) model. The FTA is found to deepen the two-country's economic partnership developed in the past fifteen or so years. On one hand, it sharpens the competitiveness of the Chinese manufacturing sector by reducing its costs of intermediate inputs. On the other hand, it raises the welfare of Australian consumers through improved terms of trade. In achieving a better utilisation of resources, adjustment of labour between sectors does occur. However, such adjustment is small in scale compared with what is occurring in the two countries amid globalisation without an FTA. Classification-JEL: D58, F15, F21, O53 Creation-Date: 2005-10 Keywords: China, Australia, FTA, investment liberalisation File-URL: https://www.copsmodels.com/ftp/workpapr/g-153.pdf File-Format: Application/pdf File-Function: Initial version, 2005-10 File-URL: https://www.copsmodels.com/elecpapr/g-153.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-153 Template-type: ReDIF-Paper 1.0 Title: The Displacement Effect of Labour-Market Programs: Estimates from the MONASH Model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: A key question concerning labour-market programs is the extent to which they generate jobs for their target group at the expense of others. This effect is measured by displacement percentages. We describe a version of the MONASH model designed to quantify the effects of labour-market programs. Our simulation results suggests that: (1) labour-market programs can generate significant long-run increases in employment; (2) displacement percentages depend on how a labour-market program affects the income trade-off faced by target and non-target groups between work and non-work; and (3) displacement percentages are larger in the short run than in the long run. Classification-JEL: C68, J23, J63 Creation-Date: 2005-07 Keywords: labour-market programs, displacement percentage, CGE modelling File-URL: https://www.copsmodels.com/ftp/workpapr/g-154.pdf File-Format: Application/pdf File-Function: Initial version, 2005-07 File-URL: https://www.copsmodels.com/elecpapr/g-154.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-154 Template-type: ReDIF-Paper 1.0 Title: Analyzing Economic Structural Change in a General Equilibrium Framework: The case of Switzerland from 1990 to 2001 Author-Name: Laurent Cretegny Author-X-Name-First: Laurent Author-X-Name-Last: Cretegny Abstract: Structural change is influenced by many factors, including technological changes and shifts in consumer preferences. These factors have an important impact on economic performance through the reallocation of resources from one economic activity to another. Applying SwissAGE, a general equilibrium model for Switzerland, this study focuses first on the estimation of changes in technology and consumer preferences. It shows then how economic history can be explained in terms of these driving factors. In particular, it shows that decrease in capital/labour ratio mitigates growth in real GDP and increase in export-oriented production heavily contributes to rapid growth in Swiss trade across the period 1990 to 2001.. Classification-JEL: D24, D58, C68, F14 Creation-Date: 2005-05 Keywords: Technological change, Preference change, Dynamic CGE modelling, Swiss structural change, Trade growth File-URL: https://www.copsmodels.com/ftp/workpapr/g-155.pdf File-Format: Application/pdf File-Function: Initial version, 2005-05 File-URL: https://www.copsmodels.com/elecpapr/g-155.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-155 Template-type: ReDIF-Paper 1.0 Title: Trade Liberalisation Scenarios for Wool Under an Australia-China Free Trade Agreement Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Abstract: This study analyses the effects of removing Tariff Rate Quota (TRQ) and other barriers on wool imports into China using the Monash Multi-Country (MMC) model, a dynamic Computable General Equilibrium Model of Australia, China and the Rest of the World. The study suggests that TRQ on greasy wool represents the most restrictive barriers to wool imports into China, if the current level of quota holds. The elimination of TRQ on greasy wool is found to boost Chinese imports of wool from Australia and Chinese exports of textiles and clothing products to the Rest of the World significantly. The Australian wool and Chinese textiles and clothing industries stand to gain from the elimination of TRQ on greasy wool. Both countries also gain in terms of a slightly higher growth in real GDP and real GNP due to the elimination of TRQ on wool imports into China. Classification-JEL: D58, F15, Q17 Creation-Date: 2005-10 Keywords: Wool, China, FTA File-URL: https://www.copsmodels.com/ftp/workpapr/g-156.pdf File-Format: Application/pdf File-Function: Initial version, 2005-10 File-URL: https://www.copsmodels.com/elecpapr/g-156.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-156 Template-type: ReDIF-Paper 1.0 Title: Running Simulations Faster on Multi-Processor or 64-Bit PCs via GEMPACK Author-Name: J Mark Horridge Author-X-Name-First: J Mark Author-X-Name-Last: Horridge Author-Name: Ken Pearson Author-X-Name-First: Ken Author-X-Name-Last: Pearson Abstract: Many modern Windows PCs now have two or more processors. These PCs cost little more than a PC with a single processor. If you are solving a model accurately using GEMPACK, you will usually extrapolate from 2 or 3 multi-step calculations (for example, from Gragg 2-step, 4-step and 6-step calculations). The separate multi-step calculations are independent of each other. For example, if you are doing Gragg 2,4,6-step calculations, the 6-step calculation can be done independently of the 4-step calculation. If you wish to solve a model by extrapolating from 2 or 3 multi-step calculations, you can now ask GEMPACK to carry out one or two of these multi-step calculations in parallel. In this way you may be able to solve the model significantly more quickly than previously. Suppose, for example, you are solving using Gragg 2,4,6-step calculations. If you have two processors, you can ask the main program to carry out the 2-step and 4-step calculations. And you can ask the main program to run (on the other processor) a separate job which carries out the 6-step calculation. When that 6-step calculation is finished, the main program will read the results from the 6-step calculation and then combine these results with the results of the 2-step and 4-step calculations to do the extrapolation and produce the usual results. We refer to the main program as the "master" and to the run which carries out the 6-step calculation in parallel as "the servant". Since the 6-step calculation probably only takes as long as the 2-step followed by the 4-step, this will approximately halve the total elapsed time required to solve the model. If you have more than two processors, you can ask the master to run two servant programs. When you run two or three calculations in parallel (one master and one or two servants), each program requires about the same amount of memory. If your model takes about 500MB of memory to solve normally, you will need about 1000MB to run one servant or about 1500MB to run two servants. If you don't have this much memory, the servants and/or the master will be running in virtual memory (which is very slow). The new 64-bit processors (combined with a 64-bit version of Windows) are interesting in this context since they are able to address more than 2GB of memory. [2 gigabytes of memory is effectively the maximum which can be addressed by any program under 32-bit Windows XP and Windows 2000.] The version of GEMPACK which allows master/servant solving is available as a beta test version for customers from organisations which have a multi-user Source-Code Version of GEMPACK with expiring annual licences. Classification-JEL: C68, C63 Creation-Date: 2006-04 Keywords: GEMPACK software, Multi-Processor File-URL: https://www.copsmodels.com/ftp/workpapr/c15.pdf File-Format: Application/pdf File-Function: Initial version, 2006-04 File-URL: https://www.copsmodels.com/elecpapr/c15.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:c15 Template-type: ReDIF-Paper 1.0 Title: Solving Applied General Equilibrium Models Represented as a Mixture of Linearized and Levels Equation Author-Name: W. Jill Harrison Author-X-Name-First: W. Jill Author-X-Name-Last: Harrison Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Author-Name: E. John Small Author-X-Name-First: E. John Author-X-Name-Last: Small Abstract: General equilibrium models are usually represented as a system of levels equations (e.g. in North America) or a system of linearized equations (e.g. in Australia). Either representation can be used to obtain accurate solutions. General-purpose software is available in both cases - GAMS or MPS/GE for levels modellers and GEMPACK for linearizers. Some equations (notably accounting identities) are naturally expressed in the levels while others (especially behavioural equations) are naturally expressed in a linearized form. This paper describes the new GEMPACK facility for solving models represented as a mixture of levels and linearized equations and discusses the advantages to modellers of using such a representation. Classification-JEL: C68, C88 Creation-Date: 1993-09 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-61.pdf File-Format: Application/pdf File-Function: Initial version, 1993-09 File-URL: https://www.copsmodels.com/elecpapr/ip-61.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-61 Template-type: ReDIF-Paper 1.0 Title: Computing Solutions for Large General Equilibrium Models Using GEMPACK Author-Name: W. Jill Harrison Author-X-Name-First: W. Jill Author-X-Name-Last: Harrison Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: GEMPACK is a suite of general-purpose economic modelling software especially suitable for general and partial equilibrium models. It can handle a wide range of economic behaviour and also contains a versatile method for solving intertemporal models. GEMPACK provides software for calculating accurate solutions of an economic model, starting from an algebraic representation of the equations of the model. These equations can be written as levels equations, linearized equations or a mixture of these two. The software provides a range of utility programs for handling the economic data base and the results of simulations, and is fully documented from a user's point of view. GEMPACK is used to implement and solve a number of economic models including several single-country models (of which the ORANI model of Australia is perhaps the best known), multi-country trade models, regional models and intertemporal (or dynamic) models. GEMPACK runs on a wide variety of computers including 80386/80486 microcomputers running DOS, Windows or OS/2, Apple Macintosh computers, Unix machines, DEC VAX and Alpha machines running VMS. This paper gives an overview of the current release of GEMPACK (Release 5.1, April 1994). Included are descriptions of * the algebra-like language used to describe and document the equations of an economic model, * the operation of the pre-processor TABLO which converts the equations of the model to a form suitable for computing solutions of the model, * the solution methods used for producing accurate solutions of the model, * the facilities for specifying and carrying out simulations, including the options for varying the choice of endogenous and exogenous variables and the variables shocked, * the condensation facility which makes it possible to solve very large models, * the utility programs for assisting in managing the data bases on which models are based, * the different versions of GEMPACK. Classification-JEL: C68, C88 Creation-Date: 1994-06 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-64.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/ip-64.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-64 Template-type: ReDIF-Paper 1.0 Title: Multiregional and Intertemporal AGE Modelling via GEMPACK Author-Name: W. Jill Harrison Author-X-Name-First: W. Jill Author-X-Name-Last: Harrison Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: The past few years have seen increasing use of multiregional and intertemporal (that is, forward-looking) applied general equilibrium (AGE) models. These models share the characteristic of rapidly expanding dimensions. Because multilateral trade models increase in size with the square of the number of regions and intertemporal models increase in proportion to the number of time periods, they can be very difficult to solve purely because of their size. This paper considers three recent models of these kinds, namely, GTAP, the Global Trade Analysis Project's multiregional model of the world; MRES, a multiregional forecasting model of Australia; and ORANI-INT, an intertemporal model of the Australian economy. Each of these has been implemented using the GEMPACK suite of general-purpose economic modelling software. In this paper we discuss features of GEMPACK which are especially relevant for multiregional and/or intertemporal models. These include an automatic facility to condense models to a manageable size; separation of theory, data, and closure/shocks; automatic creation of updated (that is, post-simulation) data files; and a solver that is well suited to intertemporal models with substantial elements of forward-looking behaviour. Each feature is illustrated via references to one or more of the three models mentioned above. Classification-JEL: C68, C53, C88 Creation-Date: 1994-09 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-66.pdf File-Format: Application/pdf File-Function: Initial version, 1994-09 File-URL: https://www.copsmodels.com/elecpapr/ip-66.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-66 Template-type: ReDIF-Paper 1.0 Title: Solving a Large-Scale Intertemporal Applied General Equilibrium Model Author-Name: Michael Malakellis Author-X-Name-First: Michael Author-X-Name-Last: Malakellis Abstract: Intertemporal Computable General Equilibrium (CGE) models have the potential to quantify the implications of sectoral and temporal linkages which are often crucial for understanding the effects of economic shocks. However, such models will prove to be of practical use for policy analysis only if accurate solutions can be obtained at reasonable cost. Often, the usefulness of intertemporal CGE models for policy analysis is diminished because the degree of economic detail incorporated is compromised in order to maintain computational tractability. The purpose of this paper is to describe how Euler's method may be used to solve large-scale intertemporal CGE models without compromising significantly on the type and degree of economic detail modelled. In particular, there is no need to restrict the number of costate variables (e.g., by assuming that capital stocks are homogeneous) nor to assume that the solution will always be interior. Classification-JEL: D58, C68, D91, D92 Creation-Date: 1992-07 File-URL: https://www.copsmodels.com/ftp/workpapr/op-74.pdf File-Format: Application/pdf File-Function: Initial version, 1992-07 File-URL: https://www.copsmodels.com/elecpapr/op-74.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-74 Template-type: ReDIF-Paper 1.0 Title: Modelling the Economic Impacts of Migration and Population Growth Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: G.A.Meagher Author-X-Name-First: Author-X-Name-Last: G.A.Meagher Abstract: The paper uses MONASH, a dynamic computable general equilibrium model, to investigate the impact on the Australian economy of a 50 per cent increase in the skilled migrant intake over the period 2005-2025. The primary purpose of the modelling it to identify how the labour market might absorb an increase in the number of skilled visa entrants. To that end, the modelling recognises labour supply by 67 types of skill (defined as an education field classified by an education level) and 81 occupations. We find that, even with the increase in immigration heavily weighted towards skilled visa entrants, the main effect of the policy is to increase the scale of the economy. The main compositional effects are to shift economic activity towards the construction sector and sectors supplying material inputs to construction activity, raise the relative wages of workers that supply labour used intensively in construction and related sectors, reduce the relative wages of skilled labour, and increase returns to capital relative to labour. Classification-JEL: C68, J31, J61 Creation-Date: 2006-05 Keywords: CGE modelling, skilled immigration File-URL: https://www.copsmodels.com/ftp/workpapr/g-157.pdf File-Format: Application/pdf File-Function: Initial version, 2006-05 File-URL: https://www.copsmodels.com/elecpapr/g-157.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Giesecke, J.A. (2006), 'The economic impact of a general increase in skilled immigration', People and Place, Vol. 14(3), pp. 48-63. Handle: RePEc:cop:wpaper:g-157 Template-type: ReDIF-Paper 1.0 Title: An Aggregate Social Accounting Matrix for the Australian Economy: Data Sources and Methods Author-Name: Felicity Pang Author-X-Name-First: Felicity Author-X-Name-Last: Pang Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: G.C. Lim Author-X-Name-First: G.C. Author-X-Name-Last: Lim Abstract: A social accounting matrix is a framework for organising information about income, expenditure and financial flows in the economy. This paper describes a methodology for compiling such a matrix for the Australian economy as it existed in 1996-97. It distinguishes between five institutions, namely, households, non-financial corporations, financial corporations, the general government and the external sector, and identifies linkages between them. The matrix is so constructed that i) for every row there is a corresponding column; ii) the totals of corresponding rows and columns are equal; iii) every entry is a receipt when read in its row context and a payment when read in its column context. However, it does not distinguish between different industries or commodities and, to that extent, is properly regarded as an aggregate matrix. It forms part of the database for ORANI-ID, an applied general equilibrium model of the Australian economy designed for analysing the effect of changes in the economic environment on the distribution of income. Classification-JEL: D30, D50, E10 Creation-Date: 2006-08 Keywords: Social Accounting Matrix, Applied General Equilibrium, Income Distribution File-URL: https://www.copsmodels.com/ftp/workpapr/g-158.pdf File-Format: Application/pdf File-Function: Initial version, 2006-08 File-URL: https://www.copsmodels.com/elecpapr/g-158.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-158 Template-type: ReDIF-Paper 1.0 Title: The Economic Impacts of Improved Foreign Investor Confidence in Bangladesh: A CGE Analysis Author-Name: Serajul Hoque Author-X-Name-First: Serajul Author-X-Name-Last: Hoque Abstract: This paper uses a large-scale computable general equilibrium model of Bangladesh to simulate the economic effects of attracting foreign investment by improved business confidence. The simulation results indicate that if all revenue of newly arrived capital accrues to foreign investors and the government maintains budget neutrality, in the long-run this would expand GDP slightly. In general, capital-intensive sectors experience robust expansion and labour-intensive sectors suffer a contraction in output and employment. Urban households experience increases in consumption because they are relatively heavily concentrated in manufacturing sectors that are favourably affected. In contrast, rural households experience decreases in consumption because they are relatively concentrated in the agriculture sector which is adversely affected. Classification-JEL: C68, E22, F21 Creation-Date: 2006-09 Keywords: Business confidence, foreign direct investment, computable general equilibrium model, Bangladesh File-URL: https://www.copsmodels.com/ftp/workpapr/g-159.pdf File-Format: Application/pdf File-Function: Initial version, 2006-09 File-URL: https://www.copsmodels.com/elecpapr/g-159.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-159 Template-type: ReDIF-Paper 1.0 Title: Removing border protection on wheat and rice: effects on rural income and food securities in China Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Abstract: In this paper, I use the Monash Multi-Country (MMC) model - a dynamic CGE model of China, Australia and the Rest of the World - to analyse the effects of removing border protection on wheat and rice in China. The analysis points to the possibility that removing border protection on wheat and rice may lead to an increase in rural income in China. This is due mainly to the following two factors. First, while removing border protection on wheat and rice leads to a contraction in agricultural activities, it also leads to an expansion in manufacturing and services activities. Second, on average, rural households in China obtain over half of their income from manufacturing and services activities. Classification-JEL: C68, F14, Q17 Creation-Date: 2006-05 Keywords: China, Wheat and rice, CGE modelling, rural income File-URL: https://www.copsmodels.com/ftp/workpapr/g-160.pdf File-Format: Application/pdf File-Function: Initial version, 2006-05 File-URL: https://www.copsmodels.com/elecpapr/g-160.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-160 Template-type: ReDIF-Paper 1.0 Title: Analysing a hypothetical Pierce's disease outbreak in South Australia using a dynamic CGE approach Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Author-Name: Simon McKirdy Author-X-Name-First: Simon Author-X-Name-Last: McKirdy Author-Name: Ryan Wilson Author-X-Name-First: Ryan Author-X-Name-Last: Wilson Abstract: A dynamic computable general equilibrium model provides a tool for analysing the regional economic consequences of a hypothetical plant pest incursion. The model is very detailed at the industry and regional level. It includes a theory of regional labour market adjustment. In our example, a hypothetical Pierce's disease incursion, direct regional economic losses are magnified by consequent depressed investment in downstream wine processing sectors. Following elimination of the disease, it takes a number of years for the region to recover fully. Classification-JEL: C68, Q11 Creation-Date: 2006-09 Keywords: plant disease, CGE modeling File-URL: https://www.copsmodels.com/ftp/workpapr/g-162.pdf File-Format: Application/pdf File-Function: Initial version, 2006-09 File-URL: https://www.copsmodels.com/elecpapr/g-162.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-162 Template-type: ReDIF-Paper 1.0 Title: Evidence-based Trade Policy Decision Making in Australia and the Development of Computable General Equilibrium Modelling Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: This paper explains why evidence-based trade policy decision making is heavily reliant on results generated by CGE models and why the development and application of these modelling has been particularly active in Australia. The paper provides a short history of CGE modelling and describes the impetus to the field provided by two factors: (a) the failures of less theoretically formal approaches; and (b) the recognition of the ability of CGE modelling to handle policy-relevant detail. The paper argues that CGE modelling flourished in Australia because Australia had the right issue, the right institutions and the right model. Classification-JEL: C68, A11, F14 Creation-Date: 2006-10 Keywords: Trade policy, CGE modeling File-URL: https://www.copsmodels.com/ftp/workpapr/g-163.pdf File-Format: Application/pdf File-Function: Initial version, 2006-10 File-URL: https://www.copsmodels.com/elecpapr/g-163.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-163 Template-type: ReDIF-Paper 1.0 Title: Reaching the planners: Generating detailed commodity Forecasts from a computable general equilibrium model Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Peter B.Dixon Author-X-Name-First: Peter Author-X-Name-Last: B.Dixon Abstract: The largest computable general equilibrium (CGE) models currently in operation produce forecasts for about 100 commodities (goods and services). This level of detail may seem overwhelming to macroeconomists, but is often inadequate for micro planning. For example, a forecast for business services (a typical commodity at the 100-level) is of marginal interest in planning educational programs for sub-categories of business services such as accountancy, advertising and architecture. As a step towards generating information for micro planning, this paper describes a top-down method for disaggregating CGE forecasts. The method relies on detailed sales data often collected by input-output sections of statistical agencies. An application is reported in which forecasts from a 114-commodity CGE model are disaggregated into forecasts for 780 commodities. Within each of the 114 core commodities, differences in prospects are forecast for sub-commodities reflecting differences in their sales patterns and in the degree to which they face import competition. Classification-JEL: C68, C81, C53 Creation-Date: 1996-03 File-URL: https://www.copsmodels.com/ftp/workpapr/op-83.pdf File-Format: Application/pdf File-Function: Initial version, 1996-03 File-URL: https://www.copsmodels.com/elecpapr/op-83.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-83 Template-type: ReDIF-Paper 1.0 Title: A Harris-style miniature version of ORANI Author-Name: Peter Cory Author-X-Name-First: Peter Author-X-Name-Last: Cory Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: A small version of ORANI is constructed, incorporating economies of scale and imperfect competition. Economic mechanisms are borrowed from a model constructed by Richard Harris, and described in his 1984 book "Trade, Industrial Policy and Canadian Manufacturing". The miniature Harris-like model is used to determine whether Harris' conclusions might carry over to Australia, and to see which of his several assumptions are responsible for his more striking results. We find that import-parity pricing is responsible for most of the 'action', while Lerner pricing (based on perceived demand elasticities) yields results similar to the conventional CRTS model. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: C68, L11, L13 Creation-Date: 1985-06 Keywords: Economies of scale, imperfect competition, applied general equilibrium models File-URL: https://www.copsmodels.com/ftp/workpapr/op-54.pdf File-Format: Application/pdf File-Function: Initial version, 1985-06 File-URL: https://www.copsmodels.com/elecpapr/op-54.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-54 Template-type: ReDIF-Paper 1.0 Title: Empirical Estimation of the Elasticity of Substitution : A Review Author-Name: Vern Caddy Author-X-Name-First: Vern Author-X-Name-Last: Caddy Abstract: This review of time series and cross-sectional studies indicates that there is little agreement as to the "true" value of the elasticity of substitution. There appears to be no clear-cut explanation for the diversity of the estimates. Not only do the various studies attribute widely different absolute levels to the elasticity of substitution in the industries considered, but there is also no apparent consistency between the ordinal rankings of the industries within each study. There is however a general pattern of differences between the cross-sectional and time series estimates -- namely, the former are usually larger (averaging about 1) than the latter (averaging perhaps about 0.5). Please note: The PDF download of this fairly old paper is an optical scan. Classification-JEL: C68, C13 Creation-Date: 1976-11 Keywords: Capital, labour, elasticity of substitution File-URL: https://www.copsmodels.com/ftp/workpapr/op-09.pdf File-Format: Application/pdf File-Function: Initial version, 1976-11 File-URL: https://www.copsmodels.com/elecpapr/op-09.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-09 Template-type: ReDIF-Paper 1.0 Title: Modelling the Effects on Australia of Interventions in World Agricultural Trade Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: David Pearce Author-X-Name-First: David Author-X-Name-Last: Pearce Abstract: In this paper we desribe a general equilibrium model of the world economy, designed to simulate the effect of a liberalization of world food trade. Our model owes much to Tyers (1985) partial equilibrium model which covered trade between 30 countries in 7 agricultural commodities. It also displays several important differences. First, ours is a general equilibrium model. We argue that the general equilibrium approach makes key assumptions explicit, and can be used to restrict uncertain parameter values. Second, we have adopted a comparative static framework, and have expressed our equations in percentage change form. Third, we have updated and revised most of the data used by Tyers. Last, our methodology allows us to include the ORANI model of the Australian economy as an integral part of the world model. This allows a detailed picture of the effects of world food trade liberalization on Australia. At the same time the ORANI results are completely consistent with those yielded by the world model. Please note: The PDF download of this fairly old paper is an optical scan. Classification-JEL: C68, D58, E27, F13, F15, Q17 Creation-Date: 1988-10 Keywords: world food trade, comparative-static simulation, computable general equilibrium model, model linking File-URL: https://www.copsmodels.com/ftp/workpapr/op-65.pdf File-Format: Application/pdf File-Function: Initial version, 1988-10 File-URL: https://www.copsmodels.com/elecpapr/op-65.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-65 Template-type: ReDIF-Paper 1.0 Title: The Chinese Economy from 1997:2015: Developing a Baseline for the MC-HUGE Model Author-Name: Yin Hua Mai Author-X-Name-First: Yin Hua Author-X-Name-Last: Mai Abstract: MC-HUGE is a dynamic Computable General Equilibrium model of the Chinese economy. The core CGE part of the MC-HUGE model is based on that of the ORANI model. The dynamic mechanism of MC-HUGE is based on that of the MONASH model. This paper documents how the MC-HUGE model is calibrated to China's economic growth data from 1997 to 2005. It also reports how the model is used to forecast a growth path for the Chinese economy from 2005 to 2015. The historical and the forecast simulation produce a baseline or a business-as-usual scenario with which to compare the effects of any changes in economic policies or environment. Classification-JEL: C68, F14, O10 Creation-Date: 2006-09 Keywords: China, CGE modelling, economic growth, oil File-URL: https://www.copsmodels.com/ftp/workpapr/g-161.pdf File-Format: Application/pdf File-Function: Initial version, 2006-09 File-URL: https://www.copsmodels.com/elecpapr/g-161.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-161 Template-type: ReDIF-Paper 1.0 Title: The economic impacts of a construction project, using SinoTERM, a multi-regional CGE model of China Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: The paper outlines the theory and database preparation of SinoTERM, a "bottom-up" computable general equilibrium model of the Chinese economy. The methodology by which we construct the multi-regional model allows us to present the economy of China in an unprecedented amount of detail. SinoTERM covers all 31 provinces and municipalities. The database of the model extends the published national input-output table for 2002 to 137 sectors. The single crops sector in the published national input-output table is split into 11 and the single livestock sector into 3. The multi-regional CGE model provides a framework that we could modify to apply to many different policy applications. We can use SinoTERM to analyse the regional economic impacts of region-specific shocks. Such shocks could major construction projects or investments in health and education sectors, in an effort to accelerate economic growth in the lagging inland provinces. We use a 63 sector, 10 region aggregation of the SinoTERM master database to model the regional economic impacts of the proposed Chongqing-Lichuan rail link construction project. Classification-JEL: C68, R13, L74 Creation-Date: 2007-06 Keywords: CGE modelling, regional modelling, construction projects File-URL: https://www.copsmodels.com/ftp/workpapr/g-164.pdf File-Format: Application/pdf File-Function: Initial version, 2007-06 File-URL: https://www.copsmodels.com/elecpapr/g-164.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in China Economic Review, Vol.19, Issue 4, Dec. 2008, pp. 628-634. Handle: RePEc:cop:wpaper:g-164 Template-type: ReDIF-Paper 1.0 Title: Uncovering the Factors behind Comparative Regional Economic Performance: A Dynamic CGE Approach Author-Name: James A Giesecke Author-X-Name-First: James A Author-X-Name-Last: Giesecke Author-Name: John R Madden Author-X-Name-First: John R Author-X-Name-Last: Madden Abstract: Recently a new method has emerged for uncovering the factors driving regional disparities in growth performance. The method involves historical analysis with a multiregional computable general equilibrium model. This paper has three main aims. The first is to demonstrate the capacity of the CGE historical technique to decompose the causes of regional divergence into clearly-specified economic factors. The second is to provide a generic miniature model that can be used as a template for adapting any multiregional CGE model to give it the capacity for undertaking historical analysis. The third is to demonstrate that this same miniature model can be used to explain the regional results in terms of the major model mechanisms behind them. Classification-JEL: D58, R13 Creation-Date: 2006-12 Keywords: Computable general equilibrium, Regional growth, Regional divergence, Multi-regional historical analysis File-URL: https://www.copsmodels.com/ftp/workpapr/g-165.pdf File-Format: Application/pdf File-Function: Initial version, 2006-12 File-URL: https://www.copsmodels.com/elecpapr/g-165.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Regional Studies, Vol. 44(10), December 2010, pp. 1329-1349. Handle: RePEc:cop:wpaper:g-165 Template-type: ReDIF-Paper 1.0 Title: The global wine market in the decade to 2015 with a focus on Australia and Chile Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: The share of global wine supplied by New World producers has increased dramatically since the late 1980s. Australia and Chile have emerged as major exporters of wine. USA has also increased production sharply though its sales have grown mainly in the domestic rather than export markets. This paper uses the World Wine Model to project the wine markets of the world from 2005 to 2015. The model includes different types of wine, so as to distinguish the growing premium segment of the market from the non-premium segment. USA is set to become the largest consumer and importer of wine in the world. Hence, growth prospects for wine exporting nations will centre increasingly on the US market. The Chinese market is likely to follow the pattern set by the Japanese market, in which per capita consumption of wine has remained relatively low despite real income growth. Nevertheless, exports to China of non-premium wine will grow over the next decade. Paper prepared for a seminar in Chile in August 2007. Research funded by the Grape and Wine Research and Development Corporation (GWRDC) of Australia. Classification-JEL: C68, Q13 Creation-Date: 2007-07 Keywords: CGE modelling, wine consumption File-URL: https://www.copsmodels.com/ftp/workpapr/g-166.pdf File-Format: Application/pdf File-Function: Initial version, 2007-07 File-URL: https://www.copsmodels.com/elecpapr/g-166.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-166 Template-type: ReDIF-Paper 1.0 Title: Mending the Family Tree: A Reconciliation of the Linearization and Levels Schools of CGE Modelling Author-Name: Thomas W. Hertel Author-X-Name-First: Thomas W. Author-X-Name-Last: Hertel Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: K. R. Pearson Author-X-Name-First: K. R. Author-X-Name-Last: Pearson Abstract: This paper offers a critical comparison between the North American levels school of applied general equilibrium modelling and the Norwegian/Australian school of linearizers. The paper develops both the levels and linearized representations of a neoclassical, multiregion trade model. This development is used to focus attention on similarities and differences between the two schools. The main conclusions are as follows. i) The method used to solve applied general equilibrium models is not really the issue - the solution method used has become short-hand for a host of cultural differences reflecting the orientation of the two groups. ii) Levels or linearized versions of models are equally valid representations. Either representation is a natural starting point for obtaining accurate solutions of the model. iii) Linearized versions ofter aid transparency in explaining the mechanisms at work in a model. iv) In view of recent developments with the GEMPACK software suite, it is no longer necessary for linearizers to settle for solutions containing linearization errors. v) The two schools have a great deal in common and both would benefit from greater cooperation. Classification-JEL: D58, F11, F41, O49 Creation-Date: 1991-06 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-54.pdf File-Format: Application/pdf File-Function: Initial version, 1991-06 File-URL: https://www.copsmodels.com/elecpapr/ip-54.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Economic Modelling, Elsevier, vol. 9(4), pages 385-407, October 1992. Handle: RePEc:cop:wpaper:ip-54 Template-type: ReDIF-Paper 1.0 Title: Why, how and when did GTAP happen? What has it achieved? Where is it heading? Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: Team research has been much more widespread in the natural sciences than in economics. Yet when it comes to modeling an economy (especially the global economy) in detail, the quantity and range of inputs necessary makes team work the only viable option. Drawing some inspiration from Australian experience, GTAP's founder, Tom Hertel, realized this from his Project's inception in 1993. The data base required to model international trade flows could not have been developed without the enthusiastic cooperation of many individuals and institutions around the world. Funding GTAP's central team at Purdue required external support. National agencies in Australia, Denmark, France, Germany, Holland, Japan, and the US are members of the supporting research consortium. The natural interest of international economic agencies led to GTAP having five such supporting agencies by 1997, which grew to ten by 2006. GTAP has striven to put the maximum feasible amount of its data, methodology and models into the public domain. It has run numerous residential intensive training courses in the use of the GTAP data and model: these have been held in the US, Europe, Africa, Asia and Latin America. The success of these courses reflects the modeling experience of the teams of course instructors and the availability of special-purpose software which allows simulations to be run without programming skill or previous knowledge of the software used. Researchers making use of GTAP have been prolific in number, and in their output. In mid April 2007, applications listed on the GTAP web site numbered 781. There were 366 subscribers to the GTAP data base at the end of April 2007, but the number of individuals making use of GTAP data exceeded 4,000. A web search using Google Scholar for the 1997 GTAP monograph records more than 1,150 citations, while versions 3 and 5 of GTAP's data base are cited 279 and 389 times respectively. It is clear that GTAP has engendered a community of quantitatively-oriented trade economists, and has integrated their efforts with those of other economists having an economy-wide perspective, especially those working on economic development. GTAP's success as a policy tool has led to an ever increasing demand for its extension to cover more commodities, regions, and economic issues: international migration of labor and climate change, for instance. With the current level of financial support, such expansions to GTAP's range are possible only on a limited scale. Classification-JEL: F1, F2, F4, C6, C8, D5 Creation-Date: 2007-09 Keywords: History of Global Trade Analysis Project, File-URL: https://www.copsmodels.com/ftp/workpapr/g-167.pdf File-Format: Application/pdf File-Function: Initial version, 2007-09 File-URL: https://www.copsmodels.com/elecpapr/g-167.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-167 Template-type: ReDIF-Paper 1.0 Title: The Sydney Olympics, seven years on: an ex-post dynamic CGE assessment Author-Name: James A Giesecke Author-X-Name-First: James A Author-X-Name-Last: Giesecke Author-Name: John R Madden Author-X-Name-First: John R Author-X-Name-Last: Madden Abstract: A recent development in ex-ante analysis of mega events is the use of computable general equilibrium (CGE) models. CGE models improve greatly on the input-output model, which they have largely displaced, since they incorporate fixed factors and substitution effects. However, like input-output, the method is still subject to the risk of over-optimistic estimation of benefits. We see three sources of such risk: (i) failure to treat public inputs as costs; (ii) elastic factor supply assumptions; and (iii) overestimation of foreign demand shocks via inclusion of "induced tourism" expenditure. In this paper, we undertake an ex-post analysis of the Olympics that addresses each of these risks. We handle the first two directly: public services used to support the Games (such as security services) are treated as Games-specific inputs, and we model the national labour market in full employment. For the third risk, we undertake an historical simulation to uncover the extent, if any, of induced tourism. We find no evidence of an induced tourism effect, and so exclude it from our analysis. With these assumptions, we find the Sydney Olympics generated a net consumption loss of approximately $2.1 billion. Classification-JEL: R13, H43, C68 Creation-Date: 2007-09 Keywords: Olympics economic impact, major projects, regional dynamic CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-168.pdf File-Format: Application/pdf File-Function: Initial version, 2007-09 File-URL: https://www.copsmodels.com/elecpapr/g-168.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Modelling the economic impacts of the Sydney Olympics in retrospect: Game over for the bonanza story?', Economic Papers, Vol. 30(2), June 2011, pp. 218-232. Handle: RePEc:cop:wpaper:g-168 Template-type: ReDIF-Paper 1.0 Title: The Downside of Domestic Substitution of Oil with Biofuels: Will Brazil Catch the Dutch Disease? Author-Name: James A. Giesecke Author-X-Name-First: James A. Author-X-Name-Last: Giesecke Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Author-Name: Jose A. Scaramucci Author-X-Name-First: Jose A. Author-X-Name-Last: Scaramucci Abstract: In response to oil price rises and carbon emission concerns, policies promoting increased ethanol usage in gasoline blends are being implemented by many countries, including major energy users such as USA, EU and Japan. As a result, Brazil, as the largest ethanol producer and exporter in the world, can expect growing foreign demand for ethanol exports. Also, the introduction of flex-fuel vehicles in Brazil is causing domestic sales of ethanol to increase steadily. In this paper, we investigate the regional and industrial economic consequences of rapid growth in Brazilian ethanol consumption and exports. For this, we use a disaggregated multi-regional computable general equilibrium (CGE) model with energy industry detail. Our modelling emphasises a number of features of ethanol production in Brazil which we expect to be important in determining the adjustment of its regional economies to a substantial expansion in ethanol production. These include regional differences in ethanol and sugar production technologies, sugarcane harvesting methods and the elasticity of land supply to sugarcane production. Classification-JEL: D58, Q13, Q42, R11, R49 Creation-Date: 2007-12 Keywords: CGE models, energy, ethanol, Brazil File-URL: https://www.copsmodels.com/ftp/workpapr/g-169.pdf File-Format: Application/pdf File-Function: Initial version, 2007-12 File-URL: https://www.copsmodels.com/elecpapr/g-169.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Brazilian Regional Structural Adjustment to Rapid Growth in Global Ethanol Demand', Studies in Regional Science, 2009, Vol. 39(1), pp. 189-207. Handle: RePEc:cop:wpaper:g-169 Template-type: ReDIF-Paper 1.0 Title: The Macroeconomic, Industrial and Distributional Effects of Removing Tariffs in Bangladesh Author-Name: Serajul Hoque Author-X-Name-First: Serajul Author-X-Name-Last: Hoque Abstract: This paper examines the economic effects of removing tariffs in Bangladesh using a computable general equilibrium (CGE) modelling approach. The results of the simulations indicate that in the short-run a funded tariff cut with fixed real national savings would increase employment slightly and hence would expand GDP. There would be a small economy-wide welfare gain as measured by real consumption. The sectoral results showed that export-oriented industries would experience an expansion in output and employment. There also would be positive effects on the suppliers to these industries. Lightly-protected industries, which rely heavily on imported intermediate inputs, are projected to show robust expansion as they would benefit from a cost reduction. However, highly-protected, import-competing industries would suffer a contraction in output and employment as they would face increased competition from imports due to the removal of tariffs. The simulation results also indicate that there would have some noticeable effects on the distribution of real consumption between different household groups. Overall, urban households would experience an expansion in real consumption and rural households would suffer a contraction as a consequence of the funded tariff cut with fixed real national savings. Classification-JEL: C68, F13, O15 Creation-Date: 2008-01 Keywords: CGE model, trade liberalisation, income distribution, Bangladesh File-URL: https://www.copsmodels.com/ftp/workpapr/g-170.pdf File-Format: Application/pdf File-Function: Initial version, 2008-01 File-URL: https://www.copsmodels.com/elecpapr/g-170.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-170 Template-type: ReDIF-Paper 1.0 Title: Growth and structural change in the Vietnamese economy 1996-2003: A CGE analysis Author-Name: Tran Hoang Nhi Author-X-Name-First: Tran Hoang Author-X-Name-Last: Nhi Author-Name: James A. Giesecke Author-X-Name-First: James A. Author-X-Name-Last: Giesecke Abstract: We use MVN - a dynamic CGE model of the Vietnamese economy - to investigate the Vietnamese economy's rapid growth and structural change over the period 1996 to 2003. We do this in two steps. First, we estimate changes in variables representing production technologies, consumer preferences, government policy and other structural features of the economy. Movements in these structural and policy variables are then used to explain the recent history of Vietnam's rapid growth and structural change. We find the most important sources of growth and change to be technical improvements, favourable shifts in foreign preferences for Vietnamese goods and employment growth. Other important factors include movement in household preferences away from primary products and towards manufactures and services, expansion in agricultural land supply, and tax reform. Classification-JEL: C68, D58, F14, O12 Creation-Date: 2008-02 Keywords: CGE model, Vietnam File-URL: https://www.copsmodels.com/ftp/workpapr/g-171.pdf File-Format: Application/pdf File-Function: Initial version, 2008-02 File-URL: https://www.copsmodels.com/elecpapr/g-171.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Sources of growth and structural change in the Vietnamese economy, 1996-2003: A CGE analysis', Asian Economic Journal, Vol. 23(2), June 2009, pp. 195-224. Handle: RePEc:cop:wpaper:g-171 Template-type: ReDIF-Paper 1.0 Title: Modelling the Economic Effects of Population Ageing Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: In March 2005, the Productivity Commission released a report on the Economic Implications of an Ageing Australia. The report describes projections for a number of economic variables including population, labour force participation rates, labour supply, employment and hours worked per week. The present paper describes a number of simulations with the MONASH model designed to extend the range of the Commission's earlier analysis. The first is a base case forecast for the Australian economy for the twenty-year period 2004-05 to 2024-25. As far as possible, it is specified so as to maintain consistency with the Commission's projections. The others are alternative forecasts for the same period in which various effects of population ageing have been removed. The alternative forecasts separately identify a taste effect due to the removal of age-related shifts in the commodity composition of household consumption, a public effect due to the removal of age-related shifts in public consumption, a skill effect due to the removal of age-related shifts in hours of employment distinguished by skill (with total hours of employment unchanged), a scale effect due to the removal of age-related shifts in total hours of employment (with the skill composition of employment unchanged), and a total effect due to the simultaneous removal of all the above age-related shifts. To accommodate the simulations, the MONASH model itself is reconfigured such that labour by qualification group can be converted into labour by occupation according to Constant Elasticity Transformation (CET) functions. Labour by occupation in its turn can be converted into effective units of industry-specific labour according to Constant Elasticity Substitution (CES) functions. Labour of a partcular skill is then distributed between occupations and industries according to relative wage rates. The scheme incorporates 67 qualification groups, 81 occupations (the ASCO minor groups) and 107 industries (the input-output classification). Classification-JEL: C53, C68, J11 Creation-Date: 2008-02 Keywords: computable general equilibrium modelling, population ageing, labour market forecasting File-URL: https://www.copsmodels.com/ftp/workpapr/g-172.pdf File-Format: Application/pdf File-Function: Initial version, 2008-02 File-URL: https://www.copsmodels.com/elecpapr/g-172.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-172 Template-type: ReDIF-Paper 1.0 Title: Will drought erode the competitiveness of Australia's wine industry? Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: Australia's 2007 vintage was smaller than the previous few vintages as a consequence of drought and frost in 2006. Then the worst happened in the following year with an unprecedented second year of drought that resulted in severe cuts to water allocations for irrigators in the southern Murray-Darling Basin. This paper examines the medium-term prospects for the Australian wine industry using global projections to 2016 with the World Wine Model. The international growth prospects of commercial-premium wine matter to growers in irrigated regions of Australia. Overall, demand for commercial-premium wine is set to grow. This is despite a slowing of growth in Australia's number one market, the United Kingdom. Research funded by the Grape and Wine Research and Development Corporation (GWRDC) of Australia. Classification-JEL: C68, Q13 Creation-Date: 2008-03 Keywords: CGE modelling, wine consumption File-URL: https://www.copsmodels.com/ftp/workpapr/g-173.pdf File-Format: Application/pdf File-Function: Initial version, 2008-03 File-URL: https://www.copsmodels.com/elecpapr/g-173.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-173 Template-type: ReDIF-Paper 1.0 Title: Population Ageing, Labour Market Reform and Economic Growth in China - A Dynamic General Equilibrium Analysis Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Abstract: The dramatic fertility decline since the beginning of 1970s has decelerated the growth of China's working age population. From 2015, this growth will turn sharply negative, resulting declining labour force in China. This has caused concerns about the sustainability of China's economic growth. This paper sheds lights on the view that a more efficient allocation of labour between sectors is likely counter balance the negative effect of populating ageing. Using a dynamic CGE model of China, we analyse the effects of removing labour market distortions that hinder the movement of labour from agricultural to manufacturing and services sectors over the period 2008 to 2020 in the context of declining growth of labour supply in China. Simulation results shows that removing the discriminations against rural workers in urban area will increase the labour shift from agricultural to non-agricultural sectors. The resulting increase in the movement of rural labour will mitigate the adverse effects of population ageing by raising not only the growth rate of total output but also household living standard. China can enjoy continued growth in its manufactured exports even with a slower growth in its labour force. Classification-JEL: J21, J61, E17 Creation-Date: 2008-05 Keywords: population ageing, labour market reform, rural migration, CGE model, China File-URL: https://www.copsmodels.com/ftp/workpapr/g-174.pdf File-Format: Application/pdf File-Function: Initial version, 2008-05 File-URL: https://www.copsmodels.com/elecpapr/g-174.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-174 Template-type: ReDIF-Paper 1.0 Title: Creating and managing an impossibly large CGE database that is up-to-date Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: Large-scale multi-regional CGE models of Australia, such as MMRF and TERM, underlie most CoPS consulting work. The regional detail, modelled in bottom-up fashion, greatly interests policy makers and is often needed to answer questions like: how would less rainfall in southern Australia affect the economy? To support this work, we have devised a variable disaggregation master database for any combination of over 1,400 statistical local areas (SLAs). Such a database may represent 172 sectors in over 100 regions. It would be slow to run simulations with so much detail, so we routinely aggregate the database before using it. Each aggregation is tailored to preserve the regional and sectoral detail that is pertinent to a particular policy issue. This paper describes the procedure used to generate a master database, starting from a published national 2001-2 input-output table, and various international trade and census data from other dates. A levels adjustment program is used to update the published input-output table from 2001-02 to 2005-06. This makes it easier to use regional data from national accounts and the 2006 census. The whole procedure is automated via a series of programs. This forms a basis for documentation and also allows us to repeat the whole procedure with different inputs. For example, we could reaggregate the SLAs to distinguish zones within each capital city, if desired. Some of our methods may be useful in global CGE models as practitioners modify databases to deal with policy issues. We have adapted the methodology of variable disaggregation to develop the first ever bottom-up representation of the Australian economy by its 150 federal electorates. Classification-JEL: C68, C81, R13, R15 Creation-Date: 2008-05 Keywords: regional modelling, CGE modelling, database development File-URL: https://www.copsmodels.com/ftp/workpapr/g-175.pdf File-Format: Application/pdf File-Function: Initial version, 2008-05 File-URL: https://www.copsmodels.com/elecpapr/g-175.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Bringing Regional Detail to a CGE Model using Census Data', Spatial Economic Analysis, Volume 5 Issue 2, pp 229-255, June 2010, Routledge Handle: RePEc:cop:wpaper:g-175 Template-type: ReDIF-Paper 1.0 Title: How would global trade liberalization affect rural and regional incomes in Australia? Author-Name: Kym Anderson Author-X-Name-First: Kym Author-X-Name-Last: Anderson Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Ernesto Valenzuela Author-X-Name-First: Ernesto Author-X-Name-Last: Valenzuela Abstract: For decades rural Australia has been discriminated against by industrial policies at home and agricultural protectionism abroad. While agricultural export taxation in poor countries had the opposite impact, recent reforms there mean that that offsetting effect on Australia has diminished. There has also been some re-instrumentation of rich-country farm policies away from trade measures. This paper draws on new evidence to examine whether Australian farmers and rural regions are still adversely affected by farm price-distortive policies abroad, using a global and a national economy-wide model. The results vindicate the continuing push by Australia's rural communities for multilateral agricultural trade liberalization. Classification-JEL: F13, Q18, C68, R13 Creation-Date: 2008-07 Keywords: trade liberalisation, rural income, regional CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-176.pdf File-Format: Application/pdf File-Function: Initial version, 2008-07 File-URL: https://www.copsmodels.com/elecpapr/g-176.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Australian Journal of Agricultural and Resource Economics, 2010, Vol. 54(4), October, pp. 389-406. Handle: RePEc:cop:wpaper:g-176 Template-type: ReDIF-Paper 1.0 Title: Welfare effects of unilateral changes in tariffs: the case of Motor vehicles and parts in Australia Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: We derive formulas for the optimal tariff rate in four theoretical models. We start with a model in which industries are competitive and then successively allow for: monopoly pricing by export industries; revenue-replacement costs; and cold-shower effects. The theoretical formulas accurately explain results from MONASH, a detailed CGE model. A critical parameter in determining the optimal tariff is the export-demand elasticity. Modellers are often reluctant to adopt empirically justifiable values for export-demand elasticities because such values generate embarrassingly large optimal tariff rates. A way out of this dilemma is the adoption of a non-linear cold-shower specification. Classification-JEL: F13, F14, C68 Creation-Date: 2008-09 Keywords: optimal tariff, export-demand elasticities, cold-shower effect, monopoly pricing, revenue-replacement costs File-URL: https://www.copsmodels.com/ftp/workpapr/g-177.pdf File-Format: Application/pdf File-Function: Initial version, 2008-09 File-URL: https://www.copsmodels.com/elecpapr/g-177.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-177 Template-type: ReDIF-Paper 1.0 Title: Does it Matter Whether Market Distortions are Evaluated Using Comparative-statics or Dynamics? Author-Name: Peter G. Mavromatis Author-X-Name-First: Peter G. Author-X-Name-Last: Mavromatis Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: We analyse the welfare outcomes of market distortions using a general-equilibrium model of a small, open economy that captures the trade-theoretic continuum from specific factors to Heckscher-Ohlin. We show the importance of two intrinsically dynamic phenomena on evaluating market distortions: structural change and imperfect factor mobility. We find that when these phenomena are captured in a dynamic framework, market distortions can generate welfare effects that contradict those generated by a comparative-static framework. We also find that the degree of factor mobility is important for accurately estimating the size of welfare effects. Our results suggest that market distortions should be evaluated in a dynamic framework that represents structural change and imperfect factor mobility, and that the degree of factor mobility should be treated as a parameter whose value is uncertain and subjected to sensitivity analysis. Classification-JEL: C61, D58, D61, F13 Creation-Date: 2008-11 Keywords: market distortions, welfare, comparative-statics versus dynamics, general equilibrium File-URL: https://www.copsmodels.com/ftp/workpapr/g-178.pdf File-Format: Application/pdf File-Function: Initial version, 2008-11 File-URL: https://www.copsmodels.com/elecpapr/g-178.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-178 Template-type: ReDIF-Paper 1.0 Title: The Long-Run Effects of Structural Change and the Treatment of International Capital Accumulation, Mobility and Ownership Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Kevin Hanslow Author-X-Name-First: Kevin Author-X-Name-Last: Hanslow Abstract: Taking a commonly-used and commonly-available trade policy model as our starting point, we examine the long-run effects of large-scale structural change with and without international capital accumulation, mobility and ownership. We demonstrate the relative merits and limitations of different treatments of international capital accumulation, mobility and ownership. In doing so, we present a treatment of international capital accumulation, mobility and ownership that gives policy analysts an approach to analysing the effects of large-scale structural policies that is not too heavy in its theoretical and data demands. Our findings support the work of Baldwin (1992) and others who have demonstrated that ignoring capital accumulation, mobility and ownership underestimates net output and welfare effects of large-scale structural change. Classification-JEL: C68, F15, F21 Creation-Date: 2009-01 Keywords: computable general equilibrium models, capital accumulation, international capital mobility and ownership, structural change File-URL: https://www.copsmodels.com/ftp/workpapr/g-179.pdf File-Format: Application/pdf File-Function: Initial version, 2009-01 File-URL: https://www.copsmodels.com/elecpapr/g-179.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Global Economic Review, vol. 38, no. 3, 2009, pp. 229-50. Handle: RePEc:cop:wpaper:g-179 Template-type: ReDIF-Paper 1.0 Title: Enhancing Agriculture and Energy Sector Analysis in CGE Modelling: An Overview of Modifications to the USAGE Model Author-Name: R. Ashley P. Winston Author-X-Name-First: R. Ashley P. Author-X-Name-Last: Winston Abstract: This paper describes some key developments to USAGE, a dynamic computable general equilibrium (CGE) model of the US economy, aimed at enhancing its utility in agricultural and bio-fuels/bio-energy analysis. The USAGE model is a large-scale dynamic CGE model of the US economy developed by the Centre of Policy Studies at Monash University in collaboration with the US International Trade Commission (USITC), and has been updated and modified for this study with assistance from the Economic Research service of the US Department of Agriculture (ERS-USDA). Additional sectoral detail and theory are developed and applied to USAGE, including a detailed modeling of land use in US agriculture involving 72 types of land, the explicit modeling of TRQ policies and by-product biomass supply (such as crop residues) using nested complementarity relationships, and careful accounting for subsidies in US ethanol production and their effects on public revenue streams. Classification-JEL: Q24, Q42, Q48, C68 Creation-Date: 2009-01 Keywords: USAGE, US agriculture, by-product biomass supply, complementarity relationships, ethanol production File-URL: https://www.copsmodels.com/ftp/workpapr/g-180.pdf File-Format: Application/pdf File-Function: Initial version, 2009-01 File-URL: https://www.copsmodels.com/elecpapr/g-180.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-180 Template-type: ReDIF-Paper 1.0 Title: Population Ageing and Structural Adjustment Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Abstract: The future effects of population ageing on the Australian economy have been widely canvassed in recent years, most notably in the two Intergenerational Reports produced by the Australian Treasury and in the Economic Implications of an Ageing Australia report produced by the Productivity Commission. These reports are mainly concerned with the effect of ageing on the government's budgetary position. On the income side, they focus on how ageing affects labour supply and gross domestic product. On the expenditure side, they focus on how ageing affects various spending categories including education, health and aged care. This paper provides a complementary analysis in that it considers how the structure of the economy is likely to be affected by these influences. In particular, it analyses the effects on 64 skill groups, 81 occupations and 106 industries: a scale effect due to age-related shifts in total hours of employment (with the skill composition of employment unchanged). a skill effect due to age-related shifts in hours of employment distinguished by skill (with total hours of employment unchanged), a taste effect due to age-related shifts in the commodity composition of household final consumption, and a public effect due to age-related shifts in government final consumption. The simulations are conducted using the MONASH applied general equilibrium model of the Australian economy. They generate results for each year from 2004-05 to 2024-25, but the analysis concentrates on explaining the deviations in the levels of selected variables in the basecase (ageing) simulation from their values in the counterfactual (no ageing) simulation in the final year, i.e., 2024-25. Results are reported separately for each of the four effects and for all four taken together (the total effect). The paper pays particular attention to the implications of the analysis for economic policy. Classification-JEL: C68, D58, J11, J21, J23 Creation-Date: 2009-01 Keywords: computable general equilibrium modelling, population ageing, economic policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-181.pdf File-Format: Application/pdf File-Function: Initial version, 2009-01 File-URL: https://www.copsmodels.com/elecpapr/g-181.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Australian Journal of Labour Economics, 2008, Vol. 11(3), pp. 227-247. Handle: RePEc:cop:wpaper:g-181 Template-type: ReDIF-Paper 1.0 Title: Modelling Value-Added Tax in the Presence of Multiproduction and Differentiated Exemptions Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Nhi Hoang Tran Author-X-Name-First: Nhi Hoang Author-X-Name-Last: Tran Abstract: We develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as they are implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. A detailed VAT framework, such as that which we present in this paper, is important for correct modelling of VAT within a general equilibrium model. Such a framework is also of value in correctly calculating the distribution of indirect tax payments in CGE model databases, a prerequisite of accurate welfare impact calculations. We use the model to analyse the effects of simplifying Vietnam's complex VAT system. We simplify the system by moving from three tax rates to one budget-neutral rate, while also removing many discretionary exemptions. We find that the policy lifts real private consumption spending, our welfare measure, by an average of 0.9 per cent over our simulation period, 2008-2018. Classification-JEL: C68, H25, H21 Creation-Date: 2009-02 Keywords: value added tax, dynamic CGE model, Vietnam, indirect tax reform File-URL: https://www.copsmodels.com/ftp/workpapr/g-182.pdf File-Format: Application/pdf File-Function: Initial version, 2009-02 File-URL: https://www.copsmodels.com/elecpapr/g-182.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of Asian Economics, 2010, Vol. 21(2), pp. 156-173. Handle: RePEc:cop:wpaper:g-182 Template-type: ReDIF-Paper 1.0 Title: Reducing Illegal Migrants in the U.S.: A Dynamic CGE Analysis Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Martin Johnson Author-X-Name-First: Martin Author-X-Name-Last: Johnson Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: We use an economy-wide model to analyze the effects of three broad programs to reduce illegal immigrants in U.S. employment: tighter border security; taxes on employers; and vigorous prosecution of employers. After looking at macroeconomic, industry and occupational effects, we decompose the welfare effect for legal residents into six parts covering changes in: producer surplus and illegal wage rates; skilled employment opportunities for natives; aggregate capital; aggregate legal employment; the terms of trade; and public expenditure. The type of program matters. Our analysis suggests a prima facie case in favor of taxes on employers. Classification-JEL: J61, C68 Creation-Date: 2008-07 Keywords: Illegal immigration, dynamic modeling, U S immigration policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-183.pdf File-Format: Application/pdf File-Function: Initial version, 2008-07 File-URL: https://www.copsmodels.com/elecpapr/g-183.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-183 Template-type: ReDIF-Paper 1.0 Title: The Economic Consequences of the U.S. Border Closure in Response to a Security Threat: A Dynamic CGE Assessment Author-Name: P.B. Dixon Author-X-Name-First: P.B. Author-X-Name-Last: Dixon Author-Name: J.A. Giesecke Author-X-Name-First: J.A. Author-X-Name-Last: Giesecke Author-Name: M.T. Rimmer Author-X-Name-First: M.T. Author-X-Name-Last: Rimmer Author-Name: A. Rose Author-X-Name-First: A. Author-X-Name-Last: Rose Abstract: We investigate the economic consequences of a twelve-month closure of U.S. borders in the form of cessation of trade, tourism and immigration flows. The federal government might contemplate such action in the face of an extreme terrorism or public health threat. Using a computable general equilibrium model, we find that border closure would cause substantial economic loss. However this damage is significantly reduced when critical imports (such as energy) are either exempted from the policy, or made available through use of domestic stockpiles (such as the Strategic Petroleum Reserve). Economic damage is reduced further if workers accept lower real wages for the duration of the security crisis. We argue that if border closure were ever to be contemplated as a response to a security or public health threat, it would be prudent to keep its scope to a minimum, to make its duration as short as possible, to allow market responses to run their course, and to enact countervailing policies that can help minimize the economic losses. Classification-JEL: F52, C68 Creation-Date: 2009-04 Keywords: border closure, strategic reserves, bottleneck imports, dynamic CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-184.pdf File-Format: Application/pdf File-Function: Initial version, 2009-04 File-URL: https://www.copsmodels.com/elecpapr/g-184.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'The economic costs to the U.S. of closing its borders: a computable general equilibrium analysis', Defence and Peace Economics, Vol. 22(1), February 2011, pp. 85-97. Handle: RePEc:cop:wpaper:g-184 Template-type: ReDIF-Paper 1.0 Title: Modelling major projects: What are the factors that determine net social benefits? Author-Name: James A Giesecke Author-X-Name-First: James A Author-X-Name-Last: Giesecke Author-Name: John R Madden Author-X-Name-First: John R Author-X-Name-Last: Madden Abstract: Economic impact statements are part and parcel of project proponents seeking government assistance, infrastructure, or environmental clearance. Such impact assessments are increasingly being conducted with computable general equilibrium (CGE) models. Frequently, however, CGE modellers do not report results in economic welfare terms nor give sufficient attention to the proper simulation requirements for determining net social benefits correctly. In this paper we take the example of a major mining project in the Western Australian region and model it under a variety of stylized scenarios in order to demonstrate the key determinants of an economic welfare measure, gross national disposable income (GNDI). We show that GNDI is sensitive to such factors as: terms of trade effects; profitability; public concessions and infrastructure; cost of foreign financing; and taxation of foreign-owned returns. Classification-JEL: D61, D58, Q33, Q38 Creation-Date: 2009-04 Keywords: major projects, economic impact, regional CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-185.pdf File-Format: Application/pdf File-Function: Initial version, 2009-04 File-URL: https://www.copsmodels.com/elecpapr/g-185.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-185 Template-type: ReDIF-Paper 1.0 Title: Modelling the Australian government's buyback scheme with a dynamic multi-regional CGE model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: TERM-H2O is a dynamic, multi-regional computable general equilibrium model of the Australian economy with agricultural detail adapted to include regional water accounts. It focuses on the effects of inter-regional water trading. Factors of production are mobile between sectors in farm industries. TERM-H2O includes complementarity conditions that impose constraints on the volume of irrigation water traded between regions. The application detailed here is to the Commonwealth government's water buyback scheme against a background of temporary drought. The buyback scheme provides a windfall gain for holders of water rights by raising the price of irrigation water. The scheme may provide a net benefit to irrigation regions while increasing environmental flows. Classification-JEL: C68, Q25, R13, R15 Creation-Date: 2009-04 Keywords: regional modelling, CGE modelling, water File-URL: https://www.copsmodels.com/ftp/workpapr/g-186.pdf File-Format: Application/pdf File-Function: Initial version, 2009-04 File-URL: https://www.copsmodels.com/elecpapr/g-186.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Saving the Southern Murray-Darling Basin: the Economic Effects of a Buyback of Irrigation Water', Economic Record 87(276):153-168, January 2011. DOI: 10.1111/j.1475-4932.2010.00691.x Handle: RePEc:cop:wpaper:g-186 Template-type: ReDIF-Paper 1.0 Title: Development of a large-scale single U.S. region CGE model using IMPLAN data: A Los Angeles County example with a productivity shock application Author-Name: James A. Giesecke Author-X-Name-First: James A. Author-X-Name-Last: Giesecke Abstract: This paper details the construction of a large-scale computable general equilibrium (CGE) model for a single U.S. region. The model contains detailed treatment of margins and taxes, features not typically given prominence in U.S. regional CGE models. The starting point for the core of the CGE model's data base is information from IMPLAN, producers of regional I/O data at the U.S. county and state levels. IMPLAN's I/O tables, however, are in producer prices with aggregated treatment of margins and taxes. The methods for reconfiguring the I/O data into basic price flows with direct allocation of imports and a disaggregated treatment of taxes and margins are described. The method is applied to construction of a Los Angeles County model. An illustrative simulation of a productivity improvement in the Los Angeles County economy is then discussed. Classification-JEL: C68, R13, R15 Creation-Date: 2009-08 Keywords: CGE, IMPLAN File-URL: https://www.copsmodels.com/ftp/workpapr/g-187.pdf File-Format: Application/pdf File-Function: Initial version, 2009-08 File-URL: https://www.copsmodels.com/elecpapr/g-187.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Spatial Economic Analysis, 2011, Vol. 6(3), pp. 331-350. Handle: RePEc:cop:wpaper:g-187 Template-type: ReDIF-Paper 1.0 Title: The costs of keeping cool for Australians with Multiple Sclerosis Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Michael Summers Author-X-Name-First: Michael Author-X-Name-Last: Summers Author-Name: Rex Simmons Author-X-Name-First: Rex Author-X-Name-Last: Simmons Author-Name: Zanfina Ademi Author-X-Name-First: Zanfina Author-X-Name-Last: Ademi Abstract: Heat intolerance is a significant medical problem affecting people with Multiple Sclerosis. For people with MS, the costs of running their air conditioners are an additional disease-related expense that must be met on top of other out-of-pocket disease-related expenses. Using the results of the 2008 Keeping Cool Survey, we estimate the relative economic disadvantage faced by MS households in trying to keeping cool. We find that MS households spend around ten times more on keeping cool than the average Australian household. Sensitivity analysis indicates that our results are robust with respect to all key parameters, across regions and nationally. Our results suggest that energy rebates for heat intolerant persons currently in place in Victoria and Western Australia should be implemented in other Australian states and territories. Classification-JEL: I18 Creation-Date: 2009-08 Keywords: cooling costs, economic disadvantage, energy rebates, heat intolerance, multiple sclerosis File-URL: https://www.copsmodels.com/ftp/workpapr/g-190.pdf File-Format: Application/pdf File-Function: Initial version, 2009-08 File-URL: https://www.copsmodels.com/elecpapr/g-190.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in The Australian Economic Review, vol. 46, no. 1, 2012, pp. 45-58. Handle: RePEc:cop:wpaper:g-190 Template-type: ReDIF-Paper 1.0 Title: Future Population Trends in China: 2005-2050 Author-Name: Chen Wei Author-X-Name-First: Chen Author-X-Name-Last: Wei Author-Name: Liu Jinju Author-X-Name-First: Liu Author-X-Name-Last: Jinju Abstract: Using China's 2000 census data, this paper conducts population projection under different fertility scenarios to gauge the likely trends in China's future population change. The range of fertility assumptions captures the uncertainty of current fertility estimates as well as the likely trends under the family planning policy and economic development. Only one mortality scenario is applied and net international migration is assumed to be null in the population projection. Future life tables are generated by Brass logit techniques with initial 2000 life tables and assumed annual life expectancy at birth following the United Nations medium improvement model. China is experiencing unprecedented demographic transition together with the radical social and economic transformation. Demographically speaking China is now a developed country. However, China's future population growth is substantial, a solely result of the population momentum built into the age structure by past fertility and mortality. 10 percent or 135 million increase is expected in the next 25 years under the medium fertility scenario. China would reach a maximum population of 1443 million in 2030, followed by a long-term population decline. Two major changes of the future population age structure of China are continuing demographic dividend and rapid population ageing. China's demographic window of opportunity opened at 1990 and will close at 2033. Having a work force of around one billion has many advantages if we consider only the dependency ratio in the population or the labour supply for the development. However, China will be also experiencing a rapid population ageing after 2015. One fifth to one quarter of the Chinese population would be older people at age 65 or over after 2035. The year of 2029 would be a turning point in China's age structure transition, when for the first time in Chinese history the elderly population would exceed the child population. Classification-JEL: J11 Creation-Date: 2009-09 Keywords: population projection, Brass logit transformation, life table, China File-URL: https://www.copsmodels.com/ftp/workpapr/g-191.pdf File-Format: Application/pdf File-Function: Initial version, 2009-09 File-URL: https://www.copsmodels.com/elecpapr/g-191.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-191 Template-type: ReDIF-Paper 1.0 Title: Will an Appreciation of the Renminbi Rebalance the Global Economy? A Dynamic Financial CGE Analysis Author-Name: Jingliang Xiao Author-X-Name-First: Jingliang Author-X-Name-Last: Xiao Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: We use a dynamic CGE model of China with a financial module and sectoral detail to examine the real and nominal impacts of a nominal exchange rate appreciation alone, fiscal policy alone and a combined fiscal and monetary package to redress China's external imbalance. The exchange rate policy alone is ineffective in both the short run and long run at reducing China's current account surplus. Fiscal policy is less effective than a combination of fiscal and monetary policy in reducing the surplus. Classification-JEL: D58, E52, E62, F31 Creation-Date: 2009-11 Keywords: dynamic financial CGE, foreign reserves, trade surplus, monetary policy, fiscal policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-192.pdf File-Format: Application/pdf File-Function: Initial version, 2009-11 File-URL: https://www.copsmodels.com/elecpapr/g-192.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-192 Template-type: ReDIF-Paper 1.0 Title: Simulating the U.S. Recession with and without the Obama package: the role of excess capacity Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: Simulations with dynamic, single-country, CGE models typically imply that reductions in domestic demand, e.g. a cut in investment, generate increases in exports and reductions in imports facilitated by real depreciation. However, currently in the U.S. a large reduction in investment is occurring simultaneously with a contraction in exports and little movement in the real exchange rate. We show that to describe this situation it is necessary to drop the standard CGE assumption that capital is always fully employed in every industry. After introducing an excess-capacity specification, we simulate the U.S. recession with and without the Obama stimulus package. Classification-JEL: C68, D50, E30, E60 Creation-Date: 2010-01 Keywords: U S recession, CGE modelling, excess capacity, sticky rents, mark-up pricing File-URL: https://www.copsmodels.com/ftp/workpapr/g-193.pdf File-Format: Application/pdf File-Function: Initial version, 2010-01 File-URL: https://www.copsmodels.com/elecpapr/g-193.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-193 Template-type: ReDIF-Paper 1.0 Title: Assessment of the Regional Economic Impacts of Catastrophic Events: CGE analysis of resource loss and behavioral effects of a RDD attack scenario Author-Name: J.A. Giesecke Author-X-Name-First: J.A. Author-X-Name-Last: Giesecke Author-Name: W.J. Burns Author-X-Name-First: W.J. Author-X-Name-Last: Burns Author-Name: A. Barrett Author-X-Name-First: A. Author-X-Name-Last: Barrett Author-Name: E. Bayrak Author-X-Name-First: E. Author-X-Name-Last: Bayrak Author-Name: A. Rose Author-X-Name-First: A. Author-X-Name-Last: Rose Author-Name: M. Suher Author-X-Name-First: M. Author-X-Name-Last: Suher Abstract: Using a large-scale CGE model, we investigate the short-run and long-run regional economic consequences of a catastrophic event - attack via radiological dispersal device (RDD) - centered on the downtown Los Angeles area. We distinguish two main routes via which such a catastrophic event might affect regional economic activity: (i) reduction in effective resource supply (the resource loss effect) and (ii) shifts in the perceptions of economic agents (the behavioral effect). Broadly, the resource loss effect relates to the physical destructiveness of the event, while the behavioral effect relates to changes in fear and risk perception on the part of firms, households and government. Both affect the size of the regional economy. RDD detonation (Dirty Bomb) causes little direct capital damage and few casualties, but generates substantial short-run resource loss via business interruption. Changes in fear and risk perception increase the supply cost of resources to the affected region, while simultaneously reducing demand for goods produced in the region. In both the short-run and long-run in the affected region, households may require higher wages to work, investors may require higher returns to invest, and economic agents may switch their preferences away from goods produced. We show that because perception effects may have lingering long-term deleterious impacts on both the supply-cost of resources to a region and willingness to pay for regional output, they have the potential to generate changes in real regional GDP that are much greater than those generated by the resource loss effect. Implications for policy that might mitigate these effects are discussed. Classification-JEL: H56, R13, C68, D58 Creation-Date: 2010-01 Keywords: RDD, economic impact, terrorism, risk perception File-URL: https://www.copsmodels.com/ftp/workpapr/g-194.pdf File-Format: Application/pdf File-Function: Initial version, 2010-01 File-URL: https://www.copsmodels.com/elecpapr/g-194.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Risk Analysis, Vol. 32(4), April 2012, pp. 583-600. Handle: RePEc:cop:wpaper:g-194 Template-type: ReDIF-Paper 1.0 Title: Minimum Cost Feeding of Dairy Cows in Northern Victoria Author-Name: Marnie Griffith Author-X-Name-First: Marnie Author-X-Name-Last: Griffith Abstract: A new era of water scarcity has changed past patterns of feeding dairy cows in northern Victoria. This paper derives a model for estimating least-cost feeding of dairy cows under a range of assumptions regarding prices for irrigation water, hay and feed grain. The cost-minimisation is subject to a variety of nutritional constraints, including seasonal provision of energy, fibre and protein. It is found that the optimal feeding regime varies considerable with input prices, from an irrigated pasture-based system to a diet based much more on bought-in hay and feed grain. This change broadly mimics that which has taken place in the region over the current extended period of drought. Output from the linear programming model is used to estimate the CES substitution parameter between water and the other inputs. This parameter is estimated at 0.7, significantly higher than the 0.2 originally used. Classification-JEL: C61, Q15, Q25 Creation-Date: 2010-01 File-URL: https://www.copsmodels.com/ftp/workpapr/g-195.pdf File-Format: Application/pdf File-Function: Initial version, 2010-01 File-URL: https://www.copsmodels.com/elecpapr/g-195.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-195 Template-type: ReDIF-Paper 1.0 Title: China's Growing Demand for Energy and Primary Inputs - Terms of trade Effects on Neighbouring Countries Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Abstract: In this study, we analysed the terms of trade effects of China's rapid growth on its neighbouring countries using a dynamic global CGE model, the MMC model. We first simulated a "real" or convergence scenario -showing how the economies of China and its neighbours might evolve based on historical data during 1997-2005 and on prevailing historical trends during 2005-2010. We then simulate a non-convergence scenario, in which it is assumed that technological progress in China proceeds in line with progress in the United States, rather than at the rate consistent with the convergence scenario. The simulation results show that, indeed, China's technological convergence leads to increased world prices for mining products and to lower world prices for manufactures, especially those it exports extensively. However, this study also identified positive effects that China's convergence has on the neighbouring countries' terms of trade. The rise in the prices of energy and primary inputs tends to increase the export price index of exporters of these products. The fall in the price of manufactured goods reduces the import price index for countries that source a significant share of their manufactured imports from China. Furthermore, China's convergence leads to expansion in world trade which, in turn, leads to increased demand for exports of transportation and insurance services. Consequently, China's convergence tends to have a positive impact on prices of services exports. Due to the offsetting factors, the overall impact of the convergence on terms of trade is small and varies depending on the economic structure of each of the neighbouring countries. The impact of China's rapid growth on most of the neighbouring countries' real GDP and GNP are positive. Classification-JEL: O10, O40, Q41, C68 Creation-Date: 2009-08 Keywords: terms of trade effects, China's energy demand, China's rapid growth, Dynamic CGE modeling File-URL: https://www.copsmodels.com/ftp/workpapr/g-196.pdf File-Format: Application/pdf File-Function: Initial version, 2009-08 File-URL: https://www.copsmodels.com/elecpapr/g-196.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-196 Template-type: ReDIF-Paper 1.0 Title: Forecasting with a CGE model: does it work? Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: Computable general equilibrium models can be used to generate detailed forecasts of output growth for commodities/industries. The main objective is to provide realistic baselines from which to calculate the effects of policy changes. In this paper, we assess a CGE forecasting method that has been applied in policy analyses in the U.S. and Australia. Using data available up to 1998, we apply the method with the USAGE model to generate "genuine forecasts" for 500 U.S. commodities/industries for the period 1998 to 2005. We then compare these forecasts with actual outcomes and with alternate forecasts derived as extrapolated trends from 1992 to 1998. Classification-JEL: C68, E37, F14 Creation-Date: 2009-05 Keywords: CGE validation, Forecasting, U S CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-197.pdf File-Format: Application/pdf File-Function: Initial version, 2009-05 File-URL: https://www.copsmodels.com/elecpapr/g-197.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-197 Template-type: ReDIF-Paper 1.0 Title: Theoretical Structure of the FAGE Model Author-Name: Jingliang Xiao Author-X-Name-First: Jingliang Author-X-Name-Last: Xiao Abstract: This paper explains the theoretical framework of the Financial Applied General Equilibrium (FAGE) model as developed in Xiao (2009). FAGE is a MONASH-style dynamic CGE model for China with a detailed financial extension. In section 1, we discuss a stylized version of the financial module. Section 2 discusses the important aspects of the full version of the FAGE model, such as, the database and investment theory. Classification-JEL: C68, D58, E44, E52, E62, F31 Creation-Date: 2010-03 Keywords: dynamic CGE, financial market, monetary policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-198.pdf File-Format: Application/pdf File-Function: Initial version, 2010-03 File-URL: https://www.copsmodels.com/elecpapr/g-198.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-198 Template-type: ReDIF-Paper 1.0 Title: Exporting Economic Models: CoPS' Experience in South Africa and Asia Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Abstract: The ORANI-F model of the Australian economy is closely based on the original ORANI model (Dixon, Parmenter, Sutton and Vincent, 1982), which has been used for many policy analyses in Australia. However, as well as having a more recent database, ORANI-F is a forecasting model: it includes some dynamic mechanisms absent from ORANI. We have created a generic version of ORANI-F as a pattern or template model to initiate collaborative CGE modelling with teams outside Australia. The ORANI-F documentation (Horridge, Parmenter and Pearson, 1993) is well adapted to skill transfer; it takes the reader through all the steps required for implementation of such a model, including its computer representation in GEMPACK, a flexible system for handling CGE models (Harrison and Pearson, 1993). The template model enables foreign collaborators to rapidly start running and analyzing their own simulations, so building up CGE experience. Country-specific features are incorporated by adapting or extending the template model. We illustrate this with IDC-GEM, a CGE model of the South African economy that is based on ORANI-F, but contains several new elements. IDC-GEM distinguishes multiple households, differing by income and ethnicity. Labour is grouped by skill and ethnicity. The macro equation system, structured around a SAM, includes mechanisms to distribute labour income between the different households. We present IDCGEM simulations of the effects of a South African tariff cut. Export-oriented industries tend to gain, at the expense of import-competing sectors like textiles and cars. This causes ethnic groups who work more in expanding industries to gain at the expense of other groups who are concentrated in shrinking sectors. On the demand side, car tariff cuts (leading to cheaper cars) disproportionately favour the richer households -- the poor buy few cars. Similarly ORANI-F has been used as a basis for the CAMGEM CGE model of Thailand. Here, special additions include an explicit treatment of Thailand's large international tourism industry. We are also in the process of contructing a Vietnamese GGE model, again based on the template. GEMPACK software, the template model, and documentation that explains both of these thoroughly, are three key advantages as we transfer our modelling technology to foreign environments. Classification-JEL: D58, A29, C68 Creation-Date: 1994-06 Keywords: CGE modelling, IDC-GEM model of South Africa,CAMGEM model of Thailand File-URL: https://www.copsmodels.com/ftp/workpapr/g-199.pdf File-Format: Application/pdf File-Function: Initial version, 1994-06 File-URL: https://www.copsmodels.com/elecpapr/g-199.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-199 Template-type: ReDIF-Paper 1.0 Title: Developing and Implementing Large Economic Models Using GEMPACK, A General Purpose Software Suite Author-Name: G. Codsi Author-X-Name-First: G. Author-X-Name-Last: Codsi Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: This paper gives a brief overview of a new suite of software designed to make it relatively painless to implement large economic models, especially those in the computable general equilibrium (CGE) class. Whereas in the past a large element in the cost of building these models has been the writing of special-purpose code, the GEMPACK facility described here virtually eliminates the need for tailor-made programs. Moreover, because this facility is accessed via an essentially algebraic language, the GEMPACK computer text file used to implement an economic model provides an easily understood, but exhaustive and definitive, documentation of the model itself - something which only rarely has been available in the past Classification-JEL: C68, D58 Creation-Date: 1994-07 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-39.pdf File-Format: Application/pdf File-Function: Initial version, 1994-07 File-URL: https://www.copsmodels.com/elecpapr/ip-39.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-39 Template-type: ReDIF-Paper 1.0 Title: Automating the Computation of Solutions of Large Economic Models Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Abstract: The computer implementation of any large economic model is usually a very expensive and time consuming task. This paper describes a software package, called GEMPACK, which is being developed specifically to reduce dramatically the research time, effort and cost required to set up one solution method (the Johansen method) on a computer. Existing features of GEMPACK are described in detail, as are developments planned for the near future. The software is model-independent, in that it works for a wide class of economic models, irrespective of the form of the equations or underlying theory. GEMPACK is portable to most mini and main-frame computers, because it has been written in ANSI standard FORTRAN 77, with such portability as a primary requirement. Classification-JEL: C68, D58, C88 Creation-Date: 1986-03 Keywords: Computable general equilibrium, applied economic modelling, software File-URL: https://www.copsmodels.com/ftp/workpapr/ip-27.pdf File-Format: Application/pdf File-Function: Initial version, 1986-03 File-URL: https://www.copsmodels.com/elecpapr/ip-27.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:ip-27 Template-type: ReDIF-Paper 1.0 Title: Culling dairy cows as a response to drought in northern Victoria Author-Name: Marnie Griffith Author-X-Name-First: Marnie Author-X-Name-Last: Griffith Abstract: Conditions for the dairy industry in northern Victoria over the past decade have been tough. High prices for feed inputs, especially when combined with low farmgate milk prices, have seen situations where dairy farmers are losing money feeding cows. In this environment, it is natural to consider whether culling in response to drought followed by replacement as conditions return to normal would leave farmers better off. This working paper develops a methodology to quantitatively evaluate culling during drought conditions for the northern Victorian dairy industry. The methodology is applied to two recent years of drought, 2002 03 and 2007 08. While higher feed costs provide reason to cull, this is largely offset by lower cull prices and higher replacement heifer costs. Farmgate milk prices also play an important role. The methodology was extended to consider a two-year drought. It was found that duration of the drought has a potentially large impact on optimal culling response. Classification-JEL: C61, Q15, Q25 Creation-Date: 2010-06 Keywords: dairy system, optimal replacement, drought File-URL: https://www.copsmodels.com/ftp/workpapr/g-200.pdf File-Format: Application/pdf File-Function: Initial version, 2010-06 File-URL: https://www.copsmodels.com/elecpapr/g-200.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-200 Template-type: ReDIF-Paper 1.0 Title: CHINAGEM: A Monash-Styled Dynamic CGE Model of China Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen Rimmer Author-X-Name-First: Maureen Author-X-Name-Last: Rimmer Abstract: CHINAGEM is a MONASH-style dynamic Computable General Equilibrium model of China. This document provides an overview of CHINAGEM database and equation structure. We aim to provide CHINAGEM users with a practical guide. This document has five sections. Section 1 is the introduction. In Section 2 we provide a description of the equation system and the database. In Section 3, we introduce how to incorporate observed data to develop the historical part of the baseline. In Section 4, we introduce how to use information derived from the historical simulation to develop the forecast part of the baseline. In Section 4, we also demonstrate how to use CHINAGEM to analyse the effects of a policy change. In the concluding section, we discuss our plan for further development of CHINAGEM. Classification-JEL: C68, O53 Creation-Date: 2010-06 Keywords: CGE, China, historical simulation File-URL: https://www.copsmodels.com/ftp/workpapr/g-201.pdf File-Format: Application/pdf File-Function: Initial version, 2010-06 File-URL: https://www.copsmodels.com/elecpapr/g-201.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-201 Template-type: ReDIF-Paper 1.0 Title: Effects on the U.S. of an H1N1 epidemic: analysis with a quarterly CGE model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Bumsoo Lee Author-X-Name-First: Bumsoo Author-X-Name-Last: Lee Author-Name: Todd Muehlenbeck Author-X-Name-First: Todd Author-X-Name-Last: Muehlenbeck Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Adam Z. Rose Author-X-Name-First: Adam Z. Author-X-Name-Last: Rose Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: We simulate the effects of a hypothetical H1N1 epidemic in the U.S. using a quarterly CGE model. Quarterly periodicity allows us to capture the short-run nature of an epidemic. We find potentially severe economic effects in the peak quarter. Averaged over the epidemic year the effects are considerably damped. Our results indicate that the macroeconomic consequences of an epidemic are more sensitive to demand-side effects such as reductions in international tourism and leisure activities than to supply-side effects such as reductions in productivity. This suggests that demand stimulus policies might be an appropriate economic response to a serious epidemic. Classification-JEL: I18, C68 Creation-Date: 2010-06 Keywords: Influenza epidemic, Quarterly CGE modelling File-URL: https://www.copsmodels.com/ftp/workpapr/g-202.pdf File-Format: Application/pdf File-Function: Initial version, 2010-06 File-URL: https://www.copsmodels.com/elecpapr/g-202.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of Homeland Security and Emergency Management, vol. 7, iss. 1, 2010, article 75. Handle: RePEc:cop:wpaper:g-202 Template-type: ReDIF-Paper 1.0 Title: Johansen's contribution to CGE modelling: originator and guiding light for 50 years Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: Fifty years ago the Norwegian economist, Leif Johansen, gave us what is now recognised as the first CGE model. While Johansen was first, he is not the father of the whole field. CGE modelling in different styles sprang largely independently from several sources. This paper describes how Johansen's style of CGE modelling took root in Australia in the 1970s and has from there spread to the rest of the world. Today, thousands of economists from nearly every country are undertaking Johansen-style CGE modelling to elucidate policy questions in trade, taxation, environment, labour markets, immigration, income distribution, technology, resources, micro-economic reform and macro stabilization. Classification-JEL: C68, B23, B31 Creation-Date: 2010-05 Keywords: CGE modelling, Leif Johansen File-URL: https://www.copsmodels.com/ftp/workpapr/g-203.pdf File-Format: Application/pdf File-Function: Initial version, 2010-05 File-URL: https://www.copsmodels.com/elecpapr/g-203.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-203 Template-type: ReDIF-Paper 1.0 Title: The Economic Costs of US Stock Mispricing Author-Name: G. Menzies Author-X-Name-First: G. Author-X-Name-Last: Menzies Author-Name: R. Bird Author-X-Name-First: R. Author-X-Name-Last: Bird Author-Name: P. Dixon Author-X-Name-First: P. Author-X-Name-Last: Dixon Author-Name: M. Rimmer Author-X-Name-First: M. Author-X-Name-Last: Rimmer Abstract: The USAGE model for the United States is used to quantify economic costs due to stock mispricing, made operational by shocking Tobin's q. The simulations quantify a potentially large impact even in the most favorable environment, where export demand holds up, and, the dollar is pro cyclical. A two year investment boom in two sectors increases consumption by a Net Present Value (NPV) amount of nearly one per cent, due to a positive investment externality onto the US terms of trade. If the investment is wasted, however, the consumption loss is nearly one half of a per cent. A 5 year 'capital strike' across the whole economy subsequent to the boom - mimicking financial distress from a burst bubble - shaves around 10 per cent off consumption. Classification-JEL: C50, G01, F41 Creation-Date: 2010-07 Keywords: Financial crises, exchange rates, macroeconomic modeling, stock market File-URL: https://www.copsmodels.com/ftp/workpapr/g-204.pdf File-Format: Application/pdf File-Function: Initial version, 2010-07 File-URL: https://www.copsmodels.com/elecpapr/g-204.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of Policy Modeling, Elsevier, vol. 33(4), pages 552-567, July 2010. Handle: RePEc:cop:wpaper:g-204 Template-type: ReDIF-Paper 1.0 Title: Asset Price Regulators, Unite: you have Macroeconomic Stability to Win and the Microeconomic Losses are Second-order Author-Name: G. Menzies Author-X-Name-First: G. Author-X-Name-Last: Menzies Author-Name: R. Bird Author-X-Name-First: R. Author-X-Name-Last: Bird Author-Name: P. Dixon Author-X-Name-First: P. Author-X-Name-Last: Dixon Author-Name: M. Rimmer Author-X-Name-First: M. Author-X-Name-Last: Rimmer Abstract: The Global Financial Crisis (GFC) has rekindled debate about the desirability of governmental interference in asset markets - either through the operation of policy levers, or, through the chosen institutional setup. In this paper we quantify economic costs due to mispricing of real assets in the USAGE model of the United States. The microeconomic costs of misallocated capital are second order small. The model suggests that regulators (or central banks) who risk mispricing by influencing asset prices do so without incurring large economic costs. Classification-JEL: C50, G01, F41 Creation-Date: 2010-07 Keywords: Capital Misallocation, Financial crises, CGE modeling, real assets File-URL: https://www.copsmodels.com/ftp/workpapr/g-205.pdf File-Format: Application/pdf File-Function: Initial version, 2010-07 File-URL: https://www.copsmodels.com/elecpapr/g-205.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-205 Template-type: ReDIF-Paper 1.0 Title: A General Framework for Measuring VAT Compliance Rates Author-Name: J.A Giesecke Author-X-Name-First: J.A Author-X-Name-Last: Giesecke Author-Name: Tran Hoang Nhi Author-X-Name-First: Tran Hoang Author-X-Name-Last: Nhi Abstract: Summary measures of VAT compliance rates are valuable for identifying problem areas in VAT implementation. They are also essential for meaningful cross-country and cross-time comparisons of VAT compliance. We present a comprehensive and general framework for calculating VAT compliance rates at both the economy-wide and detailed sectoral levels. Unlike existing measures of VAT compliance, our framework isolates a compliance measure from the effects on VAT receipts of detailed features of VAT systems as actually implemented by tax authorities. These features include multiple VAT rates, exemptions, registration rates, refund limitations, informal activity, taxation of domestic non-residents, and undeclared imports. We implement our comprehensive VAT compliance measure for Vietnam, a country with a complex VAT system. Our estimate of Vietnam's VAT compliance rate is about eleven percentage points higher than that calculated by the most popular measure of compliance, collection efficiency (CE). Our method facilitates decomposition of the difference between CE and our VAT compliance measure into the individual contributions of statutory and structural features of Vietnam's VAT regime. Classification-JEL: H25, H26, C68 Creation-Date: 2010-08 Keywords: VAT, collection efficiency, revenue ratio, compliance rate File-URL: https://www.copsmodels.com/ftp/workpapr/g-206.pdf File-Format: Application/pdf File-Function: Initial version, 2010-08 File-URL: https://www.copsmodels.com/elecpapr/g-206.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Applied Economics, Vol. 44(15), May 2012, pp. 1867-1889. Handle: RePEc:cop:wpaper:g-206 Template-type: ReDIF-Paper 1.0 Title: Structural Change in the Australian Electricity Industry During the 1990s and the Effect on Household Income Distribution Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Xiao-guang Zhang Author-X-Name-First: Xiao-guang Author-X-Name-Last: Zhang Abstract: We develop a framework for estimating the direct and indirect effects on household income of industry changes; it combines a computable general equilibrium model with a microsimulation model in a two-stage simulation procedure. We apply the framework to analysing changes in the Australian electricity industry during 1990s and their effect on household income across households. Almost all income deciles are found to have benefited from the changes but the pattern of effects meant that there was also a small increase in income inequality. Classification-JEL: C68, C69, L94, D31 Creation-Date: 2010-09 Keywords: computable general equilibrium, electricity, household income distribution, microeconomic reform, microsimulation File-URL: https://www.copsmodels.com/ftp/workpapr/g-207.pdf File-Format: Application/pdf File-Function: Initial version, 2010-09 File-URL: https://www.copsmodels.com/elecpapr/g-207.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Economic Modelling, vol. 32, May 2013, pp. 564-75. Handle: RePEc:cop:wpaper:g-207 Template-type: ReDIF-Paper 1.0 Title: NIAM: National Integrated Assessment Model - Proof-of-concept development and application Author-Name: Kevin Hanslow Author-X-Name-First: Kevin Author-X-Name-Last: Hanslow Abstract: This paper describes the initial development of a national integrated assessment model, based on the MMRF model used to analyse the CPRS. The initial development was geared towards delivering a proof of concept simulation to demonstrate the feasibility of the development of such a model. In consultation with the CSIRO, it was decided that a reduction in water availability would be an appropriate simulation, being of relevance and interest, especially in the context of climate change, and entailing a realistic load of model development in the timeframe allowed. Classification-JEL: C68 Creation-Date: 2010-11 Keywords: CGE models, water, climate change File-URL: https://www.copsmodels.com/ftp/workpapr/g-210.pdf File-Format: Application/pdf File-Function: Initial version, 2010-11 File-URL: https://www.copsmodels.com/elecpapr/g-210.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-210 Template-type: ReDIF-Paper 1.0 Title: The regional economic consequences of Less Favoured Area support: a spatial general equilibrium analysis of the Polish LFA program Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Katarzyna Zawalinska Author-X-Name-First: Katarzyna Author-X-Name-Last: Zawalinska Abstract: On accession to the EU, Poland, one of the most agricultural countries in the region, became eligible for the Common Agricultural Policy (CAP), which it perceived as a chance to develop its rural economy. However, in constructing its 2007-2013 Rural Development Programme, Poland directed the largest funding share to Less Favoured Areas (LFA) -- a controversial measure accused of poor targeting and ineffectiveness. In this paper, we analyse the spatial economic consequences of LFA support for all 16 NUTS2 regions in Poland using a regional computable general equilibrium model called POLTERM. We show that LFA support did help to increase farmers' incomes, but harmed export-oriented sectors and hindered structural change in the Polish economy. Classification-JEL: C68, O18, O11, O21, Q18 Creation-Date: 2010-11 Keywords: Common Agricultural Policy Reform, Rural development, Less Favoured Areas, Spatial Computable General Equilibrium Model, Poland File-URL: https://www.copsmodels.com/ftp/workpapr/g-211.pdf File-Format: Application/pdf File-Function: Initial version, 2010-11 File-URL: https://www.copsmodels.com/elecpapr/g-211.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'The consequences of LFA support: a multi-regional CGE analysis for Poland', Agricultural and Food Science, Vol. 22(2), 2013, pp. 272-287. Handle: RePEc:cop:wpaper:g-211 Template-type: ReDIF-Paper 1.0 Title: H1N1 influenza in Australia and its macroeconomic effects Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: James McCaw Author-X-Name-First: James Author-X-Name-Last: McCaw Author-Name: Jodie McVernon Author-X-Name-First: Jodie Author-X-Name-Last: McVernon Author-Name: Anthony Harris Author-X-Name-First: Anthony Author-X-Name-Last: Harris Abstract: Early 2009 saw the emergence of an H1N1 influenza epidemic in North America that spread to eventually become a global pandemic. Previous work has suggested that pandemics can have large macroeconomic effects on highly affected regions; here we estimate what those effects might be for Australia. Our analysis applies the MONASH-Health model: a quarterly computable general equilibrium model of the Australian economy. We simulate the effects of two H1N1 epidemics; the relatively mild 2009 outbreak and also a more severe episode. The analysis supports the assertion that an H1N1 epidemic could have significant short-run macroeconomic effects. Classification-JEL: C68, E37, I18 Creation-Date: 2010-12 Keywords: general equilibrium, H1N1 influenza, pandemics File-URL: https://www.copsmodels.com/ftp/workpapr/g-212.pdf File-Format: Application/pdf File-Function: Initial version, 2010-12 File-URL: https://www.copsmodels.com/elecpapr/g-212.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Journal of the Asia Pacific Economy, vol. 17, no. 1, 2012, pp. 22-51. Handle: RePEc:cop:wpaper:g-212 Template-type: ReDIF-Paper 1.0 Title: The Distributional Effects of the Hilmer Reforms on the Australian Gas Industry Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Xiao-guang Zhang Author-X-Name-First: Xiao-guang Author-X-Name-Last: Zhang Abstract: We analyse changes in the Australian gas industry during 1990s that were driven by the Hilmer Reforms. We estimate the direct and indirect effects on household income of these gas industry changes by combining a computable general equilibrium model with a microsimulation model in a two-stage simulation procedure. The changes lead to minor effects on household income in all regions due to the unimportance of the gas industry at that time. Some regions benefit from the changes and some lose. Income inequality is only slightly affected by the changes. Classification-JEL: C68, C69, L94, D31 Creation-Date: 2011-01 Keywords: computable general equilibrium, gas, household income distribution, microeconomic reform, microsimulation File-URL: https://www.copsmodels.com/ftp/workpapr/g-213.pdf File-Format: Application/pdf File-Function: Initial version, 2011-01 File-URL: https://www.copsmodels.com/elecpapr/g-213.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Australian Journal of Agricultural and Resource Economics, vol. 57, iss. 2, 2013, pp. 159-77. Handle: RePEc:cop:wpaper:g-213 Template-type: ReDIF-Paper 1.0 Title: Solution Software for CGE Modeling Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Author-Name: Ken Pearson Author-X-Name-First: Ken Author-X-Name-Last: Pearson Abstract: We describe the progress of computable general equilibrium (CGE) modeling software since the 1980s and contrast the main systems used today: GAMS, MPSGE, and GEMPACK. The development of these general-purpose modeling systems has underpinned rapid growth in the use of CGE models and allowed models to be shared and their results replicated. We show how a very simple model may be implemented and solved in all 3 systems. We note that they produce the same numerical results but have different strengths. We conclude by considering some challenges for the future Classification-JEL: C63, C68, D58 Creation-Date: 2011-03 Keywords: CGE, software, GAMS, GEMPACK, MPSGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-214.pdf File-Format: Application/pdf File-Function: Initial version, 2011-03 File-URL: https://www.copsmodels.com/elecpapr/g-214.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-214 Template-type: ReDIF-Paper 1.0 Title: Growth and Change in the Vietnamese Labour Market: A decomposition of forecast trends in employment over 2010-2020 Author-Name: J. A. Giesecke Author-X-Name-First: J. A. Author-X-Name-Last: Giesecke Author-Name: N. H. Tran Author-X-Name-First: N. H. Author-X-Name-Last: Tran Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: F. Pang Author-X-Name-First: F. Author-X-Name-Last: Pang Abstract: We forecast detailed trends for employment by industry, occupation and qualification in Vietnam for the period 2010 - 2020. The forecast is conducted using VNET - a large-scaled computable general equilibrium (CGE) model of the Vietnamese economy. Inputs into the forecast include independent projections for changes in macroeconomic variables; trend movements in variables describing the details of industry input requirements and household preferences; assumptions relating to Vietnam's foreign trading environment; and projections for government policies. A decomposition analysis is used to identify the contribution of each of the exogenous shocks to the forecast outcomes. This analysis facilitates transparency in forecasting by clearly distinguishing and ranking the factors responsible for generating a particular forecast outcome. It also helps researchers to focus research effort towards improving estimates for those inputs to the simulation that have the most bearing on the outcomes forecast for the labour market. Classification-JEL: C68, D58, E47, J21 Creation-Date: 2011-04 Keywords: labour market forecasting, long-run forecasting, decomposition analysis, Vietnamese economy File-URL: https://www.copsmodels.com/ftp/workpapr/g-216.pdf File-Format: Application/pdf File-Function: Initial version, 2011-04 File-URL: https://www.copsmodels.com/elecpapr/g-216.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Giesecke, J.A., N.H. Tran, G.A. Meagher and F. Pang, (2015) 'A decomposition approach to labour market forecasting', Journal of the Asia Pacific Economy, Vol. 20, No. 2, pp. 243-270. Handle: RePEc:cop:wpaper:g-216 Template-type: ReDIF-Paper 1.0 Title: Error Reduction strategies for the 1998-2005 USAGE Forecast Author-Name: Peter Mavromatis Author-X-Name-First: Peter Author-X-Name-Last: Mavromatis Author-Name: Marnie Griffith Author-X-Name-First: Marnie Author-X-Name-Last: Griffith Abstract: This paper examines methods aimed at improving baseline economic forecasts using a dynamic CGE model. Forecasting can be used to test the validity of such models, as well as to highlight possible improvements, by investigating the discrepancies between the forecast and actual outcomes. The model employed here is USAGE - a recursive dynamic, 500-industry CGE model of the U.S. USAGE generates baseline forecasts by incorporating expert forecasts for certain macro variables and extrapolating historical trends in technology, consumer preferences, positions of foreign demand curves for U.S. products, and numerous other naturally exogenous variables. In instances where important trends either dissipate or reverse, large forecast errors can arise. This paper seeks to provide explanations and guidance as to whether these various trends from the period 1992 to 1998 would continue for the 1998 to 2005 USAGE forecast. The twenty largest errors on a relative and/or absolute basis are examined. It is found that for some commodities, had all publicly available information by 1998 been appropriately utilised, certain important trends should not have been expected to continue. Hence, a better forecast could have been generated had the projection of certain trends been nullified. More generally, the findings suggest that there is a case to be argued against projecting forward large values relating to import-domestic preference twist factors in particular. It is also shown that for commodities in the trade-exposed textile, clothing and footwear industries moderately better results could have been produced by implementing import price forecasts in a way that is more in line with historical trade policy. This was achieved by projecting forward real basic import prices. However, the key drivers behind these errors were usually the significant underestimation of the impact of import-domestic preference twist factors, as well as the overestimation of factor input cost savings. In relation to forecasts for commodities in the oil and mining sectors as well as industries that service these cyclical industries, it is concluded that these typically could not have been improved in the absence of strong convictions (by 1998) about an impending mining "super-cycle" or extended boom. For the construction-related commodities demand was fuelled by virtually unprecedented low borrowing costs. In these instances, it is difficult to conclusively argue that the modeller could have produced a better forecast. Moreover, while large improvements in forecast accuracy can be obtained for some industries and sectors, the overall economy-wide forecast error does not fall greatly due to the sheer volume of commodities. While it is disappointing that the error is not very reducible, it is also reassuring because it implies that the default implementation of the model is quite powerful. In all about 4% of all commodities were specifically examined to assess the potential for error reduction. After due consideration about 7.5% of commodities were in some way directly re-projected. To generate a large reduction in the forecast error would require an extensive amount of work and probably call for the input of numerous industry specialists. Classification-JEL: C68, D58 Creation-Date: 2011-04 Keywords: CGE, forecasting, validation File-URL: https://www.copsmodels.com/ftp/workpapr/g-217.pdf File-Format: Application/pdf File-Function: Initial version, 2011-04 File-URL: https://www.copsmodels.com/elecpapr/g-217.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-217 Template-type: ReDIF-Paper 1.0 Title: Ethanol Expansion and Indirect Land Use Change in Brazil Author-Name: Joaquim Bento Ferreira-Filho Author-X-Name-First: Joaquim Bento Author-X-Name-Last: Ferreira-Filho Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: In this paper we analyze the Indirect Land Use Change (ILUC) effects of ethanol production expansion in Brazil through the use of an inter-regional, bottom-up, dynamic general equilibrium model calibrated with the 2005 Brazilian I-O table. A new methodology to deal with ILUC effects is developed, using a transition matrix of land uses calibrated with Agricultural Censuses data. Agriculture and land use are modeled separately in each of 15 Brazilian regions with different agricultural mix. This regional detail captures a good deal of the differences in soil, climate and history that cause particular land to be used for particular purposes. Brazilian land area data distinguish three broad types of agricultural land use, Crop, Pasture, and Plantation Forestry. Between one year and the next the model allows land to move between those categories, or for Unused land to convert to one of these three, driven initially by the transition matrix, changing land supply for agriculture between years. The transition matrix shows Markov probabilities that a particular hectare of land used in one year for some use would be in an other use next period. These probabilities are modified endogenously in the model according to the average unit rentals of each land type in each region. A simulation with ethanol expansion scenario is performed for year 2020, in which land supply is allowed to increase only in states located in the agricultural frontier. Results show that the ILUC effects of ethanol expansion are of the order of 0.14 hectare of new land coming from previously unused land for each new hectare of sugar cane. This value is higher than values found in the Brazilian literature. ILUC effects for pastures are around 0.47. Finally, regional differences in sugarcane productivity are found to be important elements in ILUC effects of sugar cane expansion. Classification-JEL: C68, D58, E47, Q15, Q16 Creation-Date: 2011-06 Keywords: CGE, ethanol, biofuels, land use, Brazil File-URL: https://www.copsmodels.com/ftp/workpapr/g-218.pdf File-Format: Application/pdf File-Function: Initial version, 2011-06 File-URL: https://www.copsmodels.com/elecpapr/g-218.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Land Use Policy, Volume 36, January 2014. Handle: RePEc:cop:wpaper:g-218 Template-type: ReDIF-Paper 1.0 Title: The TERM model and its data base Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: TERM (The Enormous Regional Model) provides a strategy for creating a "bottom-up" multi-regional CGE model which treats each region of a single country as a separate economy. This makes it a useful tool for examining the regional impacts of shocks that may be region-specific. TERM is designed to allow quick simulations with many regions, so allowing for models of large countries with 30 to 50 provinces, such as USA or China. TERM also offers a standard procedure for preparing a database which requires, in addition to a national input-output or use-supply table, a minimal amount of regional data. More regional data can be used if available. Classification-JEL: C68, D58, R12, R13 Creation-Date: 2011-07 Keywords: Regional CGE File-URL: https://www.copsmodels.com/ftp/workpapr/g-219.pdf File-Format: Application/pdf File-Function: Initial version, 2011-07 File-URL: https://www.copsmodels.com/elecpapr/g-219.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-219 Template-type: ReDIF-Paper 1.0 Title: Doubling U.S. Exports under the President's National Export Initiative: Is it realistic? Is it desirable? Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: President Obama's National Export Initiative is targeted at doubling U.S. exports between 2010 and 2015. We apply USAGE to quantify what the NEI would need to do to foreign import-demand curves and domestic export-supply curves to achieve this target. USAGE is a dynamic economy-wide model of the U.S. incorporating recession-relevant factor market specifications including excess capacity and wage/labor-demand elasticities that vary with the level of employment. In our central simulation, export-promotion policies compatible with the President's target reduce the cost of the current recession from about 70 million one-year jobs for the period 2008-2020 to 45 million jobs. Classification-JEL: E17, C68, E62, E65, F16 Creation-Date: 2011-04 Keywords: Export promotion, National Export Initiative, U S recession, Factor-market specification, Excess capacity File-URL: https://www.copsmodels.com/ftp/workpapr/g-220.pdf File-Format: Application/pdf File-Function: Initial version, 2011-04 File-URL: https://www.copsmodels.com/elecpapr/g-220.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-220 Template-type: ReDIF-Paper 1.0 Title: Water trading, buybacks and drought in the Murray-Darling basin: lessons from economic modelling Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Author-Name: Peter Dixon Author-X-Name-First: Peter Author-X-Name-Last: Dixon Abstract: TERM-H2O, a dynamic, multi-regional model has become a useful tool for analysing water policy issues in the Murray-Darling basin. Available data indicate that farm factor mobility has been an important avenue of adjustment to sharply reduced water availability during drought. The regional impacts of water buybacks in the basin are much smaller than otherwise as a consequence of this mobility. Classification-JEL: C54, Q11, Q15 Creation-Date: 2011-09 Keywords: CGE modelling, irrigation, agricultural economics, regional economies File-URL: https://www.copsmodels.com/ftp/workpapr/g-222.pdf File-Format: Application/pdf File-Function: Initial version, 2011-09 File-URL: https://www.copsmodels.com/elecpapr/g-222.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-222 Template-type: ReDIF-Paper 1.0 Title: MMRF: Monash Multi-Regional Forecasting Model: A Dynamic Multi-Regional Model of the Australian Economy Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Author-Name: Janine Dixon Author-X-Name-First: Janine Author-X-Name-Last: Dixon Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: MMRF is a dynamic CGE model of Australia's six State and two Territory economies. MMRF is used extensively in contract research. Several features of MMRF make it an ideal tool for policy analysis, including: dynamics, a highly disaggregated regional and sectoral database, a national labour market, and detailed modelling of government financial statistics. Classification-JEL: C68, D58, R13 Creation-Date: 2010-12 Keywords: CGE modelling, dynamics, regional economics File-URL: https://www.copsmodels.com/ftp/workpapr/g-223.pdf File-Format: Application/pdf File-Function: Initial version, 2010-12 File-URL: https://www.copsmodels.com/elecpapr/g-223.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-223 Template-type: ReDIF-Paper 1.0 Title: The Global Economic Effects of Pandemic Influenza Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Maura Sullivan Author-X-Name-First: Maura Author-X-Name-Last: Sullivan Author-Name: Pane Stojanovski Author-X-Name-First: Pane Author-X-Name-Last: Stojanovski Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Author-Name: Gordon Woo Author-X-Name-First: Gordon Author-X-Name-Last: Woo Abstract: We analyse the global economic effects of two influenza pandemics that represent extremes along the virulence-infectiousness continuum of possible pandemics: a high virulence-low infectiousness event and a low virulence-high infectiousness event. We do this by applying results from a susceptible-infected-recovered epidemiological model to a detailed, quarterly computable general equilibrium model. Our findings indicate that global economic activity will be more strongly affected by a pandemic with high infection rates rather than high virulence rates, all else being equal. At the regional level, regions with a higher degree of economic integration with the world economy will be affected more strongly than less integrated regions. Classification-JEL: C68, E37, I18 Creation-Date: 2011-10 Keywords: computable general equilibrium, pandemic influenza, quarterly periodicity File-URL: https://www.copsmodels.com/ftp/workpapr/g-224.pdf File-Format: Application/pdf File-Function: Initial version, 2011-10 File-URL: https://www.copsmodels.com/elecpapr/g-224.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Verikios, G., Sullivan, M. Stojanovski, P., Giesecke, J. and G. Woo, (2015), 'Assessing regional risks from pandemic influenza: a scenario analysis', The World Economy, 39: 1225-1255. Handle: RePEc:cop:wpaper:g-224 Template-type: ReDIF-Paper 1.0 Title: Forecasting Versus Policy Analysis with the ORANI Model Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: B. R. Parmenter Author-X-Name-First: B. R. Author-X-Name-Last: Parmenter Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: ORANI is a detailed general equilibrium model of the Australian economy. It has been applied many times by economists in universities, government departments and business in analyses of the effects on industries, occupational groups and regions of changes in policy variables (e.g., taxes and subsidies) and in other aspects of the economic environment (e.g., world commodity prices). These applications have been comparative static, i.e, they have been concerned with questions of how different the economy would be with and without the changes under investigation. They have not been concerned with forecasting the future state of the economy. More recently we have experimented with the model for forecasting. In a pilot exercise (Dixon, 1986), ORANI was used to forecast growth rates of industry outputs in Australia for the period 1985-1990. This revealed some problems inherent in the use of computable general equilibrium models for forecasting. In section 2, we describe the difference between comparative static analysis and forecasting, in general terms, and with specific reference to the ORANI model. We also discuss some computational difficulties which arise in applying ORANI to forecasting. in section 3 we present some numerical examples to supplement the theoretical material in section 2. Finally, section 4 contains some brief concluding comments on the strengths and limitations of ORANI as a forecasting device. Classification-JEL: C68, E37 Creation-Date: 1986-06 Keywords: CGE Forecasting File-URL: https://www.copsmodels.com/ftp/workpapr/op-56.pdf File-Format: Application/pdf File-Function: Initial version, 1986-06 File-URL: https://www.copsmodels.com/elecpapr/op-56.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-56 Template-type: ReDIF-Paper 1.0 Title: Construction and updating of a Ugandan CGE database Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Author-Name: Jan van Heerden Author-X-Name-First: Jan van Author-X-Name-Last: Heerden Abstract: This paper documents (1) the structure of a CGE database; (2) the data manipulation steps in creating such a database from published data; (3) updating a SAM; and (4) describe features of the updated SAM. The database is constructed for a Ugandan CGE model. The building blocks for creating a database for a CGE model are official data from an Input/output (IO) table, or from a Supply Use Table (SUT), or from a SAM. Often the structure of the published data is not in the required format of a CGE database, and so a major task is to transform the official data into a form required by a CGE database. The first step in this task is typically a review of the primary source of data. We then proceed by identifying any implausible, unusual and negative values. We adjust these elements and rebalance the database to ensure that the balancing conditions hold. We then proceed to create the matrices required by the CGE model. Typically we create (1) a source dimension for all user-specific matrices, (2) user and source-specific margin matrices, (3) user and source-specific tax matrices and (4) industry-specific land rentals. It is likely that as we adjust data and create the required matrices, we violate the balancing conditions. Therefore in each step in the database construction stage, we check the balancing conditions and when appropriate we rebalance the database to ensure that the balancing conditions hold. Having constructed the 2002 database that conforms to the CGE structure, we update the database to 2009. We then proceed to create an additional sector namely, RawOil sector. In terms of the database, we create an additional industry and an additional commodity. Our final task is to create, based on the 2009 database, an updated SAM. The CGE database does not provide information on transfers between economic agents. We therefore adjust the transfer elements based on shares estimated for 2002. Classification-JEL: C68, C69 Creation-Date: 2012-03 Keywords: CGE modelling, database construction, Uganda File-URL: https://www.copsmodels.com/ftp/workpapr/g-226.pdf File-Format: Application/pdf File-Function: Initial version, 2012-03 File-URL: https://www.copsmodels.com/elecpapr/g-226.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-226 Template-type: ReDIF-Paper 1.0 Title: PHILGEM: A SAM-based Computable General Equilibrium Model of the Philippines Author-Name: Erwin L. Corong Author-X-Name-First: Erwin L. Author-X-Name-Last: Corong Author-Name: J. Mark Horridge Author-X-Name-First: J. Mark Author-X-Name-Last: Horridge Abstract: This paper describes the structure of PHILGEM, a single country computable general equilibrium (CGE) model of the Philippine economy. PHILGEM offers a good starting point for model development, especially for researchers who may want to extend their ORANI-G models to draw on supplementary data coming from a social accounting matrix (SAM). A generic version of the model is described here designed for expository purposes and for adaptation to other countries. The description of PHILGEM's equations and database is closely integrated with an explanation of how the model is solved using the GEMPACK system. Computer files are freely available, which contain a complete model specification and database. Classification-JEL: C68, D58, O21 Creation-Date: 2012-04 Keywords: CGE modelling, Social Accounting Matrix, Philippines File-URL: https://www.copsmodels.com/ftp/workpapr/g-227.pdf File-Format: Application/pdf File-Function: Initial version, 2012-04 File-URL: https://www.copsmodels.com/elecpapr/g-227.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-227 Template-type: ReDIF-Paper 1.0 Title: Upgrading irrigation infrastructure in the Murray Darling Basin: is it worth it? Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Author-Name: Janine Dixon Author-X-Name-First: Janine Author-X-Name-Last: Dixon Abstract: Infrastructure upgrades appear superficially to be a politically acceptable way of increasing environmental flows in the Murray-Darling Basin. From an economic perspective, their costs and benefits should be compared with other policy instruments. We do so using TERM-H2O, a dynamic regional CGE model with considerable basin detail. Voluntary and fully compensated buybacks are much less costly than upgrades as a means of obtaining a target volume of environmental water. Even during drought, when highly secure water created by infrastructure upgrades is more valuable, the upgrades remain too costly. As an instrument of regional economic management, infrastructure upgrades are inferior to public spending on health, education and other services in the basin. For each job created from upgrades, the money spent on services could create between three and four jobs in the basin. Classification-JEL: C54, Q11, Q15 Creation-Date: 2012-06 Keywords: CGE modelling, water buybacks, regional economies File-URL: https://www.copsmodels.com/ftp/workpapr/g-228.pdf File-Format: Application/pdf File-Function: Initial version, 2012-06 File-URL: https://www.copsmodels.com/elecpapr/g-228.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in 'Effective use of public funding in the Murray-Darling Basin: a comparison of buybacks and infrastructure upgrades', Australian Journal of Agricultural and Resource Economics 57(2):399-421, July 2013. DOI: 10.1111/1467-8489.12001 Handle: RePEc:cop:wpaper:g-228 Template-type: ReDIF-Paper 1.0 Title: Endogenous land use and supply, and food security in Brazil Author-Name: Joaquim Ferreira-Filho Author-X-Name-First: Joaquim Author-X-Name-Last: Ferreira-Filho Author-Name: Mark Horridge Author-X-Name-First: Mark Author-X-Name-Last: Horridge Abstract: Agriculture area and production has expanded greatly in Brazil during the last 40 years. The area of annual crops almost doubled, while the area planted for pastures and forestry tripled. However, the rate of deforestation has considerably reduced since 2004. In this paper we analyze the effect of slower forest clearing on food supply and the economy in Brazil, in the presence of increasing world food prices. A multi-period computable general equilibrium model, based on previous work of the authors, is used to analyze the importance of endogenous land supply for agriculture in Brazil. The model includes annual recursive dynamics and a detailed bottom-up regional representation, which for the simulations reported here distinguished 15 aggregated Brazilian regions. It also has 36 sectors, 10 household types, 10 labor grades, and a land use change (LUC) module which tracks land use in each state. The core database is based on the 2005 Brazilian Input-Output model. The LUC model is based on a transition matrix calibrated with data from the Agricultural Censuses of 1995 and 2006, which shows how land use changed across different uses (crops, pastures, forestry and natural forests) between those years. This transition matrix is used to project the deforestation rate (or the increase in total land supply) in the baseline scenario, for the period 2005-2025. Results show that a halt in deforestation would decrease Brazilian GDP by about 0.5% in 2025, compared to a baseline which allows deforestation to continue. But there are redistributive effects that policies may need to counteract: regional GDPs would decrease by as much as 6% for states on the agricultural frontier, and food prices rise by around 2%, slightly raising the cost of living for poorer households. Classification-JEL: C68, D58, E47, Q15, Q16 Creation-Date: 2012-07 Keywords: CGE, food prices, land use, Brazil File-URL: https://www.copsmodels.com/ftp/workpapr/g-229.pdf File-Format: Application/pdf File-Function: Initial version, 2012-07 File-URL: https://www.copsmodels.com/elecpapr/g-229.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-229 Template-type: ReDIF-Paper 1.0 Title: Microeconomic Reform and Income Distribution: The case of Australian Ports and Rail Freight Industries Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Xiao-guang Zhang Author-X-Name-First: Xiao-guang Author-X-Name-Last: Zhang Abstract: We analyse structural changes in the Australian ports and rail freight industries during 1990s that were driven by microeconomic reform. We estimate the direct and indirect effects on household income groups of these industry changes by applying a computable general equilibrium model incorporating detailed household income and expenditure accounts, and microsimulation behaviour. The model contains both top-down and bottom-up linkages. The structural changes lead to a small increase in household welfare in most regions, with an overall increase of 0.18%. Income inequality is estimated to have decreased slightly by 0.02%. Classification-JEL: C68, C69, D31, L92 Creation-Date: 2012-06 Keywords: computable general equilibrium, household income distribution, microeconomic reform, microsimulation, ports, rail freight File-URL: https://www.copsmodels.com/ftp/workpapr/g-230.pdf File-Format: Application/pdf File-Function: Initial version, 2012-06 File-URL: https://www.copsmodels.com/elecpapr/g-230.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-230 Template-type: ReDIF-Paper 1.0 Title: Sparse matrix methods for computable general equilibrium models of the Johansen class Author-Name: K.R. Pearson Author-X-Name-First: K.R. Author-X-Name-Last: Pearson Author-Name: Russell J. Rimmer Author-X-Name-First: Russell J. Author-X-Name-Last: Rimmer Abstract: Considers the solution of large systems of linear equations, such as those arising from a large linearized economic model. Recommends (a) that matrix inversion be avoided, in favour of LU methods; and (b) that sparsity in the system be exploited using special computer subroutines. Some examples of time savings are tabulated. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: C63, C68 Creation-Date: 1983-11 Keywords: Numerical methods, sparsity, linear systems, imperfect competition, applied general equilibrium models File-URL: https://www.copsmodels.com/ftp/workpapr/op-43.pdf File-Format: Application/pdf File-Function: Initial version, 1983-11 File-URL: https://www.copsmodels.com/elecpapr/op-43.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-43 Template-type: ReDIF-Paper 1.0 Title: Estimation of the elasticity of substitution between imported and domestically produced intermediate inputs Author-Name: Chris M. Alaouze Author-X-Name-First: Chris M. Author-X-Name-Last: Alaouze Abstract: This 1976 paper is one of several by Alaouze about estimating Armington elasticities for the ORANI model. It postulates that during periods of high demand, domestic producers are unable to supply goods promptly and so purchasers must wait for delivery. The implicit cost of waiting for domestic goods inclines users to imported equivalents, even if domestic prices do not rise relative to foreign. Theory and data are described, but actual regression results are deferred to a later report. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: F14, C20, C51 Creation-Date: 1976-09 Keywords: Armington elasticities, import share File-URL: https://www.copsmodels.com/ftp/workpapr/op-07.pdf File-Format: Application/pdf File-Function: Initial version, 1976-09 File-URL: https://www.copsmodels.com/elecpapr/op-07.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-07 Template-type: ReDIF-Paper 1.0 Title: Estimation of the elasticity of substitution between imported and domestically produced intermediate inputs Author-Name: Chris M. Alaouze Author-X-Name-First: Chris M. Author-X-Name-Last: Alaouze Abstract: This 1977 paper is one of several by Alaouze about estimating Armington elasticities for the ORANI model. It postulates that during periods of high demand, domestic producers are unable to supply goods promptly and so purchasers must wait for delivery. The implicit cost of waiting for domestic goods inclines users to imported equivalents, even if domestic prices do not rise relative to foreign. A measure or index for "pressure of demand" is described which is then used as a regressor to explain import demand. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: F14, C20, C51 Creation-Date: 1977-10 Keywords: Armington elasticities, import share File-URL: https://www.copsmodels.com/ftp/workpapr/op-16.pdf File-Format: Application/pdf File-Function: Initial version, 1977-10 File-URL: https://www.copsmodels.com/elecpapr/op-16.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-16 Template-type: ReDIF-Paper 1.0 Title: Models of Skill Substitution and Transformation in an Occupationally Disaggregated Labour Market Author-Name: Dean J. Parham Author-X-Name-First: Dean J. Author-X-Name-Last: Parham Author-Name: G. J. Ryland Author-X-Name-First: G. J. Author-X-Name-Last: Ryland Abstract: This 1978 paper is about estimating elasticities for the ORANI model -- in particular the elasticity of substitution between labour of different types. Literature is surveyed, and a theoretical approach outlined, but discussions of data and regression results are deferred to a later report. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: J23, J24, C20 Creation-Date: 1978-03 Keywords: capital-labour substitution elasticity File-URL: https://www.copsmodels.com/ftp/workpapr/op-18.pdf File-Format: Application/pdf File-Function: Initial version, 1978-03 File-URL: https://www.copsmodels.com/elecpapr/op-18.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-18 Template-type: ReDIF-Paper 1.0 Title: The Application of a Random Coefficient Model to the Problem of Estimating Aggregate Production Parameters Author-Name: Vern Caddy Author-X-Name-First: Vern Author-X-Name-Last: Caddy Abstract: This 1977 paper is about estimating elasticities for the ORANI model -- in particular the elasticity of substitution between capital and labour. Literature is surveyed, and a theoretical approach outlined. Then data and regression results are briefly discussed. From cross-sectional data, the average elasticity of substitution between capital and labour for Australian manufacturing is estimated to be 1.28. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: J23, D24, C20 Creation-Date: 1977-03 Keywords: Production functions File-URL: https://www.copsmodels.com/ftp/workpapr/op-10.pdf File-Format: Application/pdf File-Function: Initial version, 1977-03 File-URL: https://www.copsmodels.com/elecpapr/op-10.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-10 Template-type: ReDIF-Paper 1.0 Title: Factor Demand and Product Supply Relations in Australian Agriculture : The CRESH/CRETH Production System Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: David P. Vincent Author-X-Name-First: David P. Author-X-Name-Last: Vincent Author-Name: Alan A. Powell Author-X-Name-First: Alan A. Author-X-Name-Last: Powell Abstract: This 1976 paper discusses a multi-input, multi-output production function for modelling Australian agriculture within the ORANI model. Literature is surveyed, and a theoretical approach outlined. A CRESH-CRETH production function is proposed, and equations derived. Theory and data are described, but actual regression results are deferred to a later report. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: J23, D24, C20 Creation-Date: 1976-11 Keywords: Agriculture, CRESH/CRETH Production System File-URL: https://www.copsmodels.com/ftp/workpapr/op-08.pdf File-Format: Application/pdf File-Function: Initial version, 1976-11 File-URL: https://www.copsmodels.com/elecpapr/op-08.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:op-08 Template-type: ReDIF-Paper 1.0 Title: Separability and Substitutability in Australian Manufacturing Author-Name: Vern Caddy Author-X-Name-First: Vern Author-X-Name-Last: Caddy Abstract: This 1978 paper is about modelling production input demands for the ORANI model. It examines a nested production structure where capital and labour are combined to form "value-added", which is in turn combined with a materials aggregate to form output. The nested production structure is contrasted with a more general translog form. Using trans-log, own-and cross-price elasticities are estimated. The elasticity matrix does not show the patterns implied by the nesting hypothesis which is therefore rejected. Please note: The PDF download of this fairly old paper is an optical scan of indifferent, but legible, quality Classification-JEL: J23, D24, C20 Creation-Date: 1978-11 Keywords: Separability, production functions File-URL: https://www.copsmodels.com/ftp/workpapr/o-15.pdf File-Format: Application/pdf File-Function: Initial version, 1978-11 File-URL: https://www.copsmodels.com/elecpapr/o-15.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:o-15 Template-type: ReDIF-Paper 1.0 Title: General Purpose Software for Intertemporal Modelling Author-Name: George Codsi Author-X-Name-First: George Author-X-Name-Last: Codsi Author-Name: K. R. Pearson Author-X-Name-First: K. R. Author-X-Name-Last: Pearson Author-Name: Peter J. Wilcoxen Author-X-Name-First: Peter J. Author-X-Name-Last: Wilcoxen Abstract: Intertemporal modelling is becoming increasingly important in general equilibrium policy analysis. Issues such as natural resource management, pollution control, investment, the promotion of technical change, and the accumulation of foreign debt all involve explicit intertemporal behavior and thus require intertemporal models to address adequately. Applied researchers have been slow to adopt the intertemporal paradigm because it can impose formidable computational requirements. In this paper we address this problem by presenting flexible, efficient new software which can solve complex intertemporal models in a fraction of the time required by conventional approaches. Our intertemporal software is an extension of GEMPACK, a suite of general-purpose computer programs developed to streamline the implementation and solution of a wide class of applied partial or general equilibrium models. This paper describes GEMPACK's new intertemporal modelling capabilities which make it straightforward for modellers to implement and solve their models. Because GEMPACK operates on models written in a syntax similar to ordinary algebra, it is easy for researchers to revise their models whenever necessary. In summary, this new software removes the computational impediments to intertemporal modelling, thereby allowing modellers to concentrate on the economics of their models. Classification-JEL: C63, C68 Creation-Date: 1991-05 File-URL: https://www.copsmodels.com/ftp/workpapr/ip-51.pdf File-Format: Application/pdf File-Function: Initial version, 1991-05 File-URL: https://www.copsmodels.com/elecpapr/ip-51.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Computer Science in Economics and Management, February 1992, Volume 5, Issue 1, pp 57-79. Handle: RePEc:cop:wpaper:ip-51 Template-type: ReDIF-Paper 1.0 Title: The Impact of Changes in Health Status: An Economywide Analysis for Australia Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Author-Name: Anthony H. Harris Author-X-Name-First: Anthony H. Author-X-Name-Last: Harris Abstract: We construct a dynamic, computable general equilibrium model of the Australian economy that incorporates a detailed representation of demographic and health trends of the labour force. We project the economywide effects of changes in the health status of the workforce associated with a change in chronic disease prevalence. Our results show that reductions in chronic disease and the associated rate of health decline of older workers have a much greater effect than similar reductions for younger workers. Traded sectors benefit much more than nontraded sectors, with a consequent improvement in the trade balance and a real depreciation of the exchange rate. The increase in workforce participation also decreases the capital-labour ratio and raises the returns to capital relative to labour. Classification-JEL: C68, I15, J11 Creation-Date: 2013-02 Keywords: chronic disease, computable general equilibrium, health status, labour supply File-URL: https://www.copsmodels.com/ftp/workpapr/g-231.pdf File-Format: Application/pdf File-Function: Initial version, 2013-02 File-URL: https://www.copsmodels.com/elecpapr/g-231.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-231 Template-type: ReDIF-Paper 1.0 Title: Accelerated water savings and demand growth for farm outputs: impacts on the economy of the southern Murray-Darling Basin Author-Name: Glyn Wittwer Author-X-Name-First: Glyn Author-X-Name-Last: Wittwer Abstract: It is possible that water efficiency in irrigation agriculture may improve substantially over the next decade or two. At the same time, worsening agricultural land and water scarcities worldwide may not be matched by agricultural productivity growth. This means that there may be strong growth in export demand for agricultural and food products in major agricultural nations. This study uses TERM-H2O, a dynamic CGE model with considerable detail in the southern Murray-Darling Basin, to examine the impacts of both fast water efficiency gains and strong export demand growth over time. Water efficiency gains will have relatively small impacts on the economy of the southern basin, but during drought years the gains are larger. The economic benefits on the southern basin of rapid export demand growth will be larger than those of water savings. Water efficiency gains and rapid export demand growth have differing impacts on the composition of crops and livestock production in the southern basin. Classification-JEL: C68, Q25 Creation-Date: 2012-04 Keywords: Dynamic computable general equilibrium modelling, Water efficiency gains, TERM-H20 File-URL: https://www.copsmodels.com/ftp/workpapr/g-232.pdf File-Format: Application/pdf File-Function: Initial version, 2012-04 File-URL: https://www.copsmodels.com/elecpapr/g-232.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-232 Template-type: ReDIF-Paper 1.0 Title: Labour Market Forecasting, Reliability and Workforce Development Author-Name: G.A.Meagher Author-X-Name-First: Author-X-Name-Last: G.A.Meagher Author-Name: Felicity Pang Author-X-Name-First: Felicity Author-X-Name-Last: Pang Abstract: A primary motivation for providing education and training is to equip the workforce with the skills it requires to meet the needs of industry. Furthermore, as training takes some time to accomplish, the training that is provided today must be targeted at the needs of industry at some time in the future. Hence workforce development requires access to a labour market forecast of some kind. Formal labour market forecasts produced using an economy-wide model have several features which ought to make them attractive to policy makers. For example, they embody modern economic theory and large amounts of relevant economic data, they are comprehensive and coherent, and they can be updated regularly at reasonable cost. Yet many training professionals are reluctant to avail themselves of formal forecasts, preferring instead to rely on more informal methods such case studies, graduate destination surveys and surveys of business opinion. Formal forecasts are held to be too unreliable for most policy purposes. It is argued in this paper that the reluctance is misplaced and, indeed, that it constitutes an unnecessary barrier to efficient workforce development. The discussion draws on a detailed analysis of the performance of a labour market forecasting system built around the MONASH applied general equilibrium model of the Australian economy. Using forecasts published over the last thirteen years, the paper reviews their accuracy for industries, occupations and regions, and compares them with forecasts derived from time series extrapolation. The paper also reviews various qualitative arguments concerning reliability that have been advanced in the literature. Finally it considers the system adopted for allocating training resources in Australia, noting particularly that it fails to deliver a suitably articulated view of the future state of the economy which it is designed to service. The paper also reviews various qualitative arguments that have been advanced against the use of formal labour market forecasts in workforce development. It suggests five propositions which should guide such considerations, but which are often ignored by the education and training community. Classification-JEL: C53, D58, I28, J21, O56 Creation-Date: 2011-09 Keywords: labour market forecasting, computable general equilibrium, workforce development, skill mismatch, Australia File-URL: https://www.copsmodels.com/ftp/workpapr/g-225.pdf File-Format: Application/pdf File-Function: Initial version, 2011-09 File-URL: https://www.copsmodels.com/elecpapr/g-225.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-225 Template-type: ReDIF-Paper 1.0 Title: Modelling the impact of HIV/AIDS: A literature review Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: A number of methods and models have been used to analyse the economic impacts of HIV/AIDS. The overall consensus is that depending on the severity of the epidemic, HIV/AIDS holds serious negative consequences for economic growth and economic welfare. The aim of this paper is to give a broad overview of the methodologies used in analysing the economic impact of HIV/AIDS on various countries, including South Africa. The literature review is structured by method of analysis. For each method, selected papers are briefly described. This paper is set out as follows: Section 1 describes studies using econometric estimation. This method is useful in cross-country analysis and allows for the impact of the disease to be compared internationally. Section.2 describes studies applying country-specific macroeconometric models to examine the impact of HIV/AIDS. Section 3 describes the use of aggregate growth models. These models extend the Solow model, allowing HIV/AIDS to be captured via the reduction in employment and population growth. These country-specific models are useful in analysing the impact of HIV/AIDS on economic growth and per capita income. Section 4 describes the use of country-specific CGE models in the analysis of HIV/AIDS. Section 5 reviews other methods used for analysing the impact of HIV/AIDS on an economy. These methods include overlapping-generations models, demographic models and sector-specific analysis. The paper ends with concluding remarks. Classification-JEL: I190, O55 Creation-Date: 2013-05 Keywords: HIV/AIDS, Africa File-URL: https://www.copsmodels.com/ftp/workpapr/g-233.pdf File-Format: Application/pdf File-Function: Initial version, 2013-05 File-URL: https://www.copsmodels.com/elecpapr/g-233.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-233 Template-type: ReDIF-Paper 1.0 Title: Construction of a database for a dynamic CGE model for South Africa Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: This paper describes the construction of database constructed for a dynamic CGE model for South Africa (hereafter SAGE). The starting point for creating a database for a CGE model are official data from an Input/output (IO) table, or from a Supply Use Table (SUT), or from a Social Accounting Matrix (SAM). Often the structure of the published data is not in the required format of a CGE database, and so a major task is to transform the official data into a form required by a CGE database. Four characteristics of the SAGE database are noted: 1. It contains information regarding the structure of the South African economy in the base year (2002). 2. It is the initial solution to the SAGE model. 3. It has the same basic structure as the ORANIG and MONASH databases. 4. The basic database is supplemented by additional data relating to dynamics. The database is organised in four parts. The first includes data on the coefficients that are computed from the input-output (IO) table. These coefficients represent the basic flows of commodities between users, commodity taxes paid by users, margin flows that facilitate the flow of commodities and valued added matrices. The second part of the SAGE database contains information on behavioural parameters. The elasticities influence the degree to which economic agents change their behaviour when relative prices change. The third part of the database contains information on government accounts, accounts with the rest of the world and industry-specific capital stocks and depreciation rates. The fourth part of this paper describes the tests undertaken to test for model validity. This paper is set out as follows: Section 1 describes the structure of the IO database. Section 2 reviews the official data sources used to create the IO database. Section 3 describes the steps taken to transform the official data into the correct format. Section 4 describes the elasticities and parameters adopted in for SAGE. Section 5 describes additional information regarding industry-specific capital stocks and government accounts. Section 6 describes various tests that were conducted to ensure that the database is balanced. The paper ends with a conclusion. Classification-JEL: C81, C68, O55 Creation-Date: 2013-05 Keywords: Computable general equilibrium (CGE), Database, Africa, Supply Use Tables File-URL: https://www.copsmodels.com/ftp/workpapr/g-234.pdf File-Format: Application/pdf File-Function: Initial version, 2013-05 File-URL: https://www.copsmodels.com/elecpapr/g-234.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-234 Template-type: ReDIF-Paper 1.0 Title: Labour-market database for South Africa with HIV/AIDS detail Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: This paper describes the construction of a database that underlies the labour supply module developed for South Africa, with a specific focus on HIV/AIDS. The labour supply theory imposes a stock/flow dynamic mechanism on labour market groups distinguished by labour market activity, age, gender, race, and HIV status/stage. Broadly, the theory specifies that at the start of year t, people aged 15-65 (the working age population, hereafter the WAP) are divided into categories based on common characteristics. These characteristics are age, gender, race, HIV status/stage and labour-market activity undertaken in year t-1. People in categories offer their labour services to activities performed during year t. At the end of year t, people still part of the WAP progress one year in age and may change their HIV status/stage. Some people leave the WAP due to retirement or death. After this transition, people are again grouped into categories, based on common characteristics. The process of labour supply from a category to an activity is then repeated. For the implementation of this theory, we need to create a database that contains matrices that form the initial solution of the model. Three characteristics of this database are noted: (1) it contains detailed information regarding the structure of the WAP in the base year (2002); (2) it includes a transition matrix that allows adults to change their age and HIV stage between year t-1 and year t and (3) it includes matrices describing the flow of adults from categories to activities. This paper is organised in three parts. The first part describes the construction of the activities matrix in the base year. The activities matrix describes the number of people in each labour-market activity by age, gender, race and HIV stage. The second part of this paper explains the construction of the categories matrix and the flow matrices. The categories matrix shows the number of people in each labour-market activity by age, gender, race and HIV stage at the start of the year. The flow matrices show the number of people by age, gender, race and HIV stage, moving from a labour-market category to an activity. The third part of the paper describes the construction of the transition matrix. This matrix allows people in each labour-market activity, given their gender and race, to change their age from to and change their HIV stage from to . Classification-JEL: I190, O55 Creation-Date: 2013-05 Keywords: Africa, HIV/AIDS File-URL: https://www.copsmodels.com/ftp/workpapr/g-235.pdf File-Format: Application/pdf File-Function: Initial version, 2013-05 File-URL: https://www.copsmodels.com/elecpapr/g-235.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-235 Template-type: ReDIF-Paper 1.0 Title: Developing a baseline forecast for a South African dynamic CGE model (SAGE-H) with HIV/AIDS detail Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: Policy analysis with a detailed CGE model requires two simulations. The first simulation is the baseline forecast or business-as-usual simulation. This simulation models the growth of the South African economy and the HIV epidemic over time in the absence of the policy change under consideration. The second simulation is the policy simulation. This simulation generates a second forecast that incorporates all the exogenous features of the baseline forecast, and now includes policy-related shocks reflecting the details of the policy under consideration. The impacts of a policy are typically reported as a percentage deviation away from the baseline forecast. This paper describes the baseline forecast developed for a South African dynamic computable general equilibrium (CGE) model (SAGE-H). SAGE-H is a large-scale dynamic CGE model of the South African economy which consists of two inter-dependent modules. The first module contains core economic theory and the second module contains the detailed modelling of labour supply including HIV detail. To gain a better understanding of the main features of SAGE-H, I follow the approach of Dixon and Rimmer (2002) by first developing a stylised back-of-the-envelope (BOTE) model. The BOTE model captures the underlying features and macroeconomic relationships in SAGE-H. In this paper I use the BOTE model to (1) explain the closures developed for the baseline simulation and (2) aid with the interpretation of the main macro results produced in the baseline simulation. Use of miniature models such as BOTE to describe the results from a full-scale applied economic model has a long-tradition in CGE modelling (Dixon et al., 1984). I use the BOTE model to describe the closure settings and results of the baseline forecast. The simulation period is from 2003 to 2045. The baseline forecast includes three different closures. The first closure is developed to accommodate observed macroeconomic data for the period 2003-2009. I also introduce data to show the change in the number of new HIV cases over this period. The second closure is developed to accommodate independent forecast data for selected macroeconomic variables. This closure is used for 2010 to 2014. The third closureis developed for the years 2015 to 2045. For this period no independent forecast data are available. This paper is set out as follows: Section 1 gives a broad overview of SAGE-H. Section 2 describes the equations in the BOTE model that underlines the main macro mechanisms in SAGE-H. This is followed by a description of a short-run closure for the BOTE model. In developing an appropriate closure for the BOTE model, I distinguish between equations describing economic relationships within any given year, equations describing the underlying theory of how adults change their HIV status at the start of any given year, equations describing the start-of-the-year stock variables, and an equation describing the wage adjustment mechanism. The short-run closure serves as the starting point in developing the appropriate baseline forecast closure, which is described in Section 3. The paper ends with concluding remarks in Section 4. Classification-JEL: C68, I190, O55 Creation-Date: 2013-05 Keywords: Computable general equilibrium (CGE), Africa, HIV/AIDS File-URL: https://www.copsmodels.com/ftp/workpapr/g-236.pdf File-Format: Application/pdf File-Function: Initial version, 2013-05 File-URL: https://www.copsmodels.com/elecpapr/g-236.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-236 Template-type: ReDIF-Paper 1.0 Title: The effects of facilitating the flow of rural workers to urban employment in China Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Author-Name: Peter B. Dixon Author-X-Name-First: Peter B. Author-X-Name-Last: Dixon Author-Name: Maureen T. Rimmer Author-X-Name-First: Maureen T. Author-X-Name-Last: Rimmer Abstract: The Second Agricultural Survey in China revealed that during 2006 about 130 million rural workers spent more than a month working outside the township of their residence. Most of these migrant workers engaged in industrial and services activities. They have played an increasingly important role in China's economic development. In this paper we introduce model mechanisms capturing demand and supply characteristics for these migrant workers under a MONASH-style dynamic Computable General Equilibrium framework. The model, SICGE (State Information Centre General Equilibrium), is applied in this study to analyse the effects of reducing institutional restrictions to the flow of rural labour to urban employment. Classification-JEL: J21 Creation-Date: 2009-11 Keywords: China, CGE modelling, labour supply, rural-urban migration File-URL: https://www.copsmodels.com/ftp/workpapr/g-188.pdf File-Format: Application/pdf File-Function: Initial version, 2009-11 File-URL: https://www.copsmodels.com/elecpapr/g-188.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-188 Template-type: ReDIF-Paper 1.0 Title: Estimating the size of rural labour surplus in China - A dynamic general equilibrium analysis Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Abstract: China's dramatic economic growth during the past three decades is characterised by rapid industrialisation that was fuelled by a large pool of rural surplus labour in the agricultural sector. The large scale movement of labour from the agricultural to the industrial and services sectors witness in recent years raises pertinent questions about its sustainability: is there still a pool of surplus labourers in rural China? If there is, how large is that pool and how long can it last? These questions are hotly debated in China. The present study contributes to that discussion by providing a quantitative framework to estimate the size of the surplus labour under various scenarios. Applying a dynamic general equilibrium model of the Chinese economy, we present our estimates of the size of the rural labour surplus from 1997-2005 and forecast its size from 2006-2015. Two scenarios are presented in this paper, one is business-as-usual; the other with accelerated improvement of labour productivity in China's agricultural sector. Classification-JEL: J21, C53 Creation-Date: 2009-06 Keywords: China, rural labour surplus, agriculture labour productivity, CGE model File-URL: https://www.copsmodels.com/ftp/workpapr/g-189.pdf File-Format: Application/pdf File-Function: Initial version, 2009-06 File-URL: https://www.copsmodels.com/elecpapr/g-189.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-189 Template-type: ReDIF-Paper 1.0 Title: How fast is population ageing in China? Author-Name: Yinhua mai Author-X-Name-First: Yinhua Author-X-Name-Last: mai Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Author-Name: Wei Chen Author-X-Name-First: Wei Author-X-Name-Last: Chen Abstract: Using adjusted 2000 population census data, this paper conducts China's population projections to 2050. Three fertility and four mortality scenarios yield 12 sets of results. Despite the below-replacement fertility, China's population will continue growing for many years. However, there are substantial differences among the twelve scenarios. The maximum population could range from less than 1.4 billion to more than 1.6 billion. One of the notable trends is the rapid population ageing. By the end of 2050 more than one-fifth to one-third of China's population would be aged 65 and over. Demographic dividend is expected to continue in next 10 to 20 years depending on future fertility which in turn is determined by the changes in China's one-child policy. The Chinese government should be aware of all possible situations of population changes and particularly population ageing in the first half of the century and well prepared for all possible challenges they may arise. Classification-JEL: J11 Creation-Date: 2009-11 Keywords: Cohort-component, Brass logit transformation, Population projection, Population ageing, China File-URL: https://www.copsmodels.com/ftp/workpapr/g-208.pdf File-Format: Application/pdf File-Function: Initial version, 2009-11 File-URL: https://www.copsmodels.com/elecpapr/g-208.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-208 Template-type: ReDIF-Paper 1.0 Title: Labour Market Reform, Rural Migration and Income Inequality in China - A Dynamic General Equilibrium Analysis Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Abstract: Using a dynamic CGE model this paper explores the effects of reform of the household registration (hukou) system in China on economic growth and rural - urban income equality over the period 2010 to 2020. It addresses the specific questions whether reform of the household registration system together with the removal of other institutional barriers to rural labour mobility can accelerate rural labour mobility, and whether the enhanced labour mobility can improve the efficiency of the allocation of labour with the result of increasing labour productivity and reducing rural-urban income inequality. Classification-JEL: J61, C68 Creation-Date: 2011-08 Keywords: rural-urban migration, income inequality, labour market, China, CGE modelling File-URL: https://www.copsmodels.com/ftp/workpapr/g-221.pdf File-Format: Application/pdf File-Function: Initial version, 2011-08 File-URL: https://www.copsmodels.com/elecpapr/g-221.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-221 Template-type: ReDIF-Paper 1.0 Title: Population Ageing, Retirement Age Extension and Economic Growth in China A Dynamic General Equilibrium Analysis Author-Name: Xiujian Peng Author-X-Name-First: Xiujian Author-X-Name-Last: Peng Author-Name: Yinhua Mai Author-X-Name-First: Yinhua Author-X-Name-Last: Mai Abstract: China is experiencing rapid population ageing with the proportion of the population aged 65 and above projected to increase almost threefold between 2010 and 2050. The growth of the working age population is expected to stop approximately in 2015 and to turn strongly negative. China's low retirement age compounds the ageing problem. One means to mitigate the negative effects of shrinking labour force on economic growth is to stimulate labour force participation among the current working age population. Raising the official retirement age is one strategy to encourage labour force participation. This paper first investigates the effects of population ageing on labour force participation rates and, thus, on labour supply over the period of 2010-2030. It then estimates the effects of retirement age extension schemes on the size of the labour force. Thirdly, applying dynamic computable general equilibrium (CGE) modelling, it examines the effects of retirement age extension schemes on China's economic growth. It finds that raising the retirement age increases effective labour input, real GDP, capital stock, household real consumption and exports. The main results are that retirement age extension is likely to boost China's economic growth and that both urban and rural sectors will benefit from the extension. Classification-JEL: J11, J26, C68 Creation-Date: 2013-08 Keywords: population ageing, retirement age extension, economic growth, CGE model File-URL: https://www.copsmodels.com/ftp/workpapr/g-237.pdf File-Format: Application/pdf File-Function: Initial version, 2013-08 File-URL: https://www.copsmodels.com/elecpapr/g-237.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-237 Template-type: ReDIF-Paper 1.0 Title: DIAC-TERM: A Multi-regional Model of the Australian Economy With Migration Detail Author-Name: Nhi Tran Author-X-Name-First: Nhi Author-X-Name-Last: Tran Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Author-Name: James Giesecke Author-X-Name-First: James Author-X-Name-Last: Giesecke Abstract: DIAC-TERM is a dynamic multi-regional computable general equilibrium (CGE) model of Australia with an emphasis on labour market detail relevant to the analysis of Australia's Net Overseas Migration (NOM) program. Labour demand by industry, region and occupation is determined by the bottom-up multi-regional TERM model. Labour supply by region and occupation is based on a stock/flow dynamic describing disaggregated labour market groups. Between years, sub-populations, defined by age, region, skill, labour force status and visa status, transition between age and visa status categories. Within years, these same sub-populations and the new entrants to the labour market make utility-optimising offers to various labour market activities, such as working in a particular occupation, or leaving the labour force, or moving overseas. We illustrate the use of the model by analysing the consequences of three scenarios involving changes in the NOM program: a once-off increase in intake under the temporary skilled migration program, a permanent increase in the intake under the permanent skilled migration program, and a permanent increase in gross arrivals of non-New Zealand visa categories. Classification-JEL: C68, D58, R13, F22 Creation-Date: 2012-07 Keywords: CGE modelling, dynamics, regional economics, migration, labour economics File-URL: https://www.copsmodels.com/ftp/workpapr/g-238.pdf File-Format: Application/pdf File-Function: Initial version, 2012-07 File-URL: https://www.copsmodels.com/elecpapr/g-238.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Tran, N.H., Roos, E.L., Giesecke, J.A. and Madden, J.R. (2016), 'Can regionally-targeted temporary visas be an effective policy instrument? -- a general equilibrium analysis'. In J. Poot and M. Roskruge (eds.) Population Change and Impacts in Asia and the Pacific. New Frontiers in Regional Science: Asia Perspectives, Springer. Handle: RePEc:cop:wpaper:g-238 Template-type: ReDIF-Paper 1.0 Title: Reform of Australian Urban Transport: A CGE-Microsimulation Analysis of the Effects on Income Distribution Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Xiao-guang Zhang Author-X-Name-First: Xiao-guang Author-X-Name-Last: Zhang Abstract: Australian urban transport industries experienced substantial reform during the 1990s leading to significant structural change. Urban transport is typically an important expenditure item for households and structural change in these services may affect households differently depending on their position in the distribution of income and expenditure. We estimate the effects on household income groups of this structural change by applying a computable general equilibrium model incorporating microsimulation behaviour with top-down and bottom-up links. We compare estimates based on a pure microsimulation approach, a top-down approach and a hybrid top-down/bottom-up approach. We estimate small reductions in real income and small reductions in inequality; this pattern is largely replicated across regions. Our results are insensitive to the inclusion of bottom-up links; in contrast, applying a pure microsimulation approach gives accurate results at the aggregate level but underestimates the variation in effects across deciles and regions. Classification-JEL: C68, C69, D31, L92 Creation-Date: 2013-12 Keywords: computable general equilibrium, income distribution, microeconomic reform, microsimulation, urban transport File-URL: https://www.copsmodels.com/ftp/workpapr/g-239.pdf File-Format: Application/pdf File-Function: Initial version, 2013-12 File-URL: https://www.copsmodels.com/elecpapr/g-239.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-239 Template-type: ReDIF-Paper 1.0 Title: Structural change and income distribution: the case of Australian telecommunications Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Author-Name: Xiao-guang Zhang Author-X-Name-First: Xiao-guang Author-X-Name-Last: Zhang Abstract: The Australian telecommunications sector experienced substantial structural change during the 1990s, change that increased productivity and reduced costs. At this time, telecommunications was already an important item of household expenditure and input to production. We estimate the effect of the structural change on households depending on their location in the distribution of income and expenditure. Our estimates are calculated by applying a computable general equilibrium model incorporating microsimulation behaviour with top-down and bottom-up links. We estimate significant increases in real income and small increases in inequality from the changes; the pattern of effects is largely uniform across regions. Sensitivity analysis indicates that our results are insensitive to variations in model parameters. Classification-JEL: C68, C69, D31, L99 Creation-Date: 2014-02 Keywords: computable general equilibrium, income distribution, microeconomic reform, microsimulation, telecommunications File-URL: https://www.copsmodels.com/ftp/workpapr/g-240.pdf File-Format: Application/pdf File-Function: Initial version, 2014-02 File-URL: https://www.copsmodels.com/elecpapr/g-240.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-240 Template-type: ReDIF-Paper 1.0 Title: Theoretical specification of a labour-supply module, including HIV/AIDS, for South Africa Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: This paper describes the application of a detailed labour-supply module, including HIV/AIDS for South Africa. I begin by developing a model of the South African labour market that embodies two salient features of HIV: (1) incidence and transmission rates follow distinct patterns by age, gender, race and occupation; (2) the disease progresses through a number of distinct stages. To model these features, the labour-market model must be dynamic, and identify large amounts of age, gender, race, labour-market function and HIV-stage detail. Dixon and Rimmer (2003) develop and apply a labour-market model with high levels of occupational detail. They subsequently extend this model to investigate issues related to immigration (Dixon & Rimmer, 2009, 2010, 2011), and of relevance to this paper, health (Dixon et al., 2010). In developing the labour-market module, we define people between the age of 15 and 65 by labour-market function, age, gender, race and HIV stage. We distinguish between employment, unemployment, new entrant and "permanently departed from the labour force" categories and employment, unemployment and "permanently departed from the labour force" activities. People in each category at the start of year decide on their labour supply during year . They make this decision by solving an optimisation problem. We assume that people in employment categories supply their labour more strongly to employment activities than people in the unemployment categories. We also assume that supply of labour depends on health status. A person who is HIV negative supplies labour more strongly to employment activities than a person who is HIV positive. Adults grouped in the "permanently departed from the labour force" category do not offer to any labour force activity. As we shall see, under this modelling framework, policies aimed at reducing the transmission of HIV in year increase labour supply in year by increasing (relative to the basecase) the number of HIV-negative people in year . Although not described in this paper, improved treatment of people already infected with the HIV virus may decrease the rate at which people move through the stages of HIV infection. Improved treatment may increase the effective labour supply of HIV-infected people. The outline of this paper is as follows. Section 1 defines the key concepts necessary for the functioning of the labour-market specification. Section 2 explains the basic labour-supply mechanism. The aim is to introduce the basic mechanism before it is explained in detail later in this chapter. Section 3 describes how categories at the start of year are determined. Section 4 describes the utility maximisation problem that people face when they decide on their labour offers. This equation shows that labour offers depend on relative wages. Section 5 describes the possible flows between categories and activities. Section 6 describes the equations facilitating these flows. Section 7 explains the wage determination process in the policy simulation. Under this process real wages are sticky in the short term and flexible in the long term, with employment adjusting in the short term and returning to basecase in the long term. Section 8 describes equations that allow for independent HIV forecasts to be introduced to the basecase. Section 9 describes an equation that models the deviation in the number of new HIV cases. This equation can be activated during the policy simulation. Classification-JEL: I190, O55 Creation-Date: 2014-02 Keywords: Africa, HIV/AIDS File-URL: https://www.copsmodels.com/ftp/workpapr/g-241.pdf File-Format: Application/pdf File-Function: Initial version, 2014-02 File-URL: https://www.copsmodels.com/elecpapr/g-241.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-241 Template-type: ReDIF-Paper 1.0 Title: Adding financial flows to a CGE model of PNG Author-Name: Peter Dixon Author-X-Name-First: Peter Author-X-Name-Last: Dixon Author-Name: Maureen Rimmer Author-X-Name-First: Maureen Author-X-Name-Last: Rimmer Author-Name: Louise Roos Author-X-Name-First: Louise Author-X-Name-Last: Roos Abstract: Traditionally, CGE models do not include equations modelling the financial sector of a country. Interest rates are therefore set exogenously and often the nominal exchange rate is set as the numeraire. Normally, these models would show that tighter monetary policy (i.e. increase in interest rates) would lead to a fall in investments and a decline in the domestic price level relative to foreign prices. This causes a real devaluation of the currency. The fall in domestic prices would be good for the trade balance because the country becomes more competitive with exports increasing and imports falling. However, there is another mechanism not captured in these models. If interest rates increase, we expect that foreigners would want to hold more domestic assets (due to the higher returns) and domestic agents would want to hold more domestic assets and less foreign assets. We expect a net inflow of capital and an appreciation of the currency. This appreciation would then hurt the trade account. Our task is to develop a financial module and run simulations to investigate the impact of tighter monetary policy in Papua New Guinea (PNG). The financial module is a set of equations that are added, as an extension, to an existing comparative-static model for PNG, see Kauzi (2003). The comparative-static model of PNG is an ORANIG-style model and includes the core economic equations. In this paper we do not explain the equations of the core economic module. For a detailed description of the core module, see Dixon et al. (1982). The financial module is linked to the core CGE model via three conditions. Firstly, the current account deficit is equal to the net inflow of capital. Secondly, the government deficit is equal to the new acquisition of domestic bonds. Thirdly, investment in industry i is set equal to the new acquisition of assets in industry i by agents z. Once these equations are activated, we endogenously determine the nominal exchange rate, domestic bond rate and the change in the cost of funds to industries. In this paper we describe the theory underlying the financial module. We simulate a 1 per cent increase in the interest rate the BPNG pays to the commercial banks for holding deposits with the BPNG. The first two simulations with the comparative-static module are conducted with the financial module inoperative. This means that the financial module is not linked to the core economic module and that the nominal exchange rate and rates of interest are set exogenously. We expect the results of these two simulations to show that tighter monetary policy leads to an improvement in the trade balance. In simulations 3 we activate the first condition where we set the current account balance equal to the net capital inflow. This allows us to endogenously determine the nominal exchange rate. In simulation 4 we activate the second condition where we set the government deficit equal to the issuing of domestic bonds. We can now endogenously determine the domestic bond rate. In simulation 5 we activate the final constraint where we endogenously determine the change in the cost of lending funds to industries. By activating all the conditions we linked the financial module to the core economic module. We expect the results of the final three simulations to show that tighter monetary policy leads to a worsening of the trade balance. Classification-JEL: C68, E44, E47, E52 Creation-Date: 2014-02 Keywords: Computable general equilibrium (CGE) models, Financial markets, Interest rates, Monetary Policy File-URL: https://www.copsmodels.com/ftp/workpapr/g-242.pdf File-Format: Application/pdf File-Function: Initial version, 2014-02 File-URL: https://www.copsmodels.com/elecpapr/g-242.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-242 Template-type: ReDIF-Paper 1.0 Title: An Emissions Trading Scheme for Australia: National and Regional Impacts Author-Name: Philip D. Adams Author-X-Name-First: Philip D. Author-X-Name-Last: Adams Author-Name: Brian R. Parmenter Author-X-Name-First: Brian R. Author-X-Name-Last: Parmenter Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: Computable general equilibrium modelling in Australia is oriented towards providing inputs to the policy-formation process, a process that requires detail. We explain how the necessary level of detail can be provided using analysis of the potential economic impacts of a carbon price on the Australian economy that operates as part of a global emissions trading scheme. The global scheme sets the price and allocation of permits across countries. We find that domestic abatement falls well short of targeted abatement, Australia's GDP is 1.1% lower relative to the basecase, and some industries and regions are vulnerable to employment losses. Classification-JEL: C68, Q52, Q58 Creation-Date: 2014-05 Keywords: carbon pricing, computable general equilibrium modelling, emissions trading File-URL: https://www.copsmodels.com/ftp/workpapr/g-243.pdf File-Format: Application/pdf File-Function: Initial version, 2014-05 File-URL: https://www.copsmodels.com/elecpapr/g-243.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-243 Template-type: ReDIF-Paper 1.0 Title: Climate change mitigation and employment growth Author-Name: G.A.Meagher Author-X-Name-First: Author-X-Name-Last: G.A.Meagher Author-Name: R.A.Wilson Author-X-Name-First: Author-X-Name-Last: R.A.Wilson Author-Name: J.M. Dixon Author-X-Name-First: J.M. Author-X-Name-Last: Dixon Abstract: Reducing greenhouse gas emissions without reducing economic growth requires advances in technology (which reduce the emissions intensity of industrial production) and/or policy measures to promote structural change (which shift the composition of production in favour of less polluting industries). Moreover, both methods of mitigating the effect of the gases must inevitably proceed in an environment of structural change driven by a variety of other economic forces. This paper introduces new economic modelling which permits an analysis of the effects of mitigation policy on employment that is firmly located within the historical structure of the economy, and within its likely future development in the medium term. Specifically, the paper investigates the imposition of a tax on the employment of labour by each industry in proportion to the emissions per hour of employment in the industry. In this approach, the extent to which the job of a particular worker can be considered to be 'green' depends on the industry in which he/she works and not on his/her occupation or skill level. The effects of imposing the tax are reported as deviations from the current CEDEFOP medium-term employment forecasts for the European Union. The analysis uses a CGE labour market extension to the macro-econometric E3ME model. The tax is assumed to be returned to producers in such a way that aggregate employment remains constant, so the focus of the analysis is on the structural, rather than the secular, implications of mitigation policy for employment growth. The model incorporates a detailed description of the structure of the labour market, identifying cross-classified employment in 41 industries, 27 occupations and 3 skill levels. Hence it allows for a comprehensive, cohesive assessment of the economy's requirements for 'green' skills in the sense that it determines which occupations/skill levels expand, and which contract, in response to the mitigation policy. This kind of comparison is important for assigning the appropriate weight to training programs that allocate resources to green skills rather than alternative objectives of educational policy. The analysis in the paper is restricted to the United Kingdom but the model is designed to provide a suitable basis for comparative-dynamic labour market analyses for all countries belonging to the European Union. Classification-JEL: C68, D33, D58, I29, J23, O52, Q52 Creation-Date: 2014-09 Keywords: CGE modelling, climate change mitigation, distribution of employment, green jobs File-URL: https://www.copsmodels.com/ftp/workpapr/g-244.pdf File-Format: Application/pdf File-Function: Initial version, 2014-09 File-URL: https://www.copsmodels.com/elecpapr/g-244.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-244 Template-type: ReDIF-Paper 1.0 Title: The Effects of Domestic Rice Market Interventions Outside Business-As-Usual Conditions For Imported Rice Prices Author-Name: M.J. Mariano Author-X-Name-First: M.J. Author-X-Name-Last: Mariano Author-Name: J.A. Giesecke Author-X-Name-First: J.A. Author-X-Name-Last: Giesecke Author-Name: N.H. Tran Author-X-Name-First: N.H. Author-X-Name-Last: Tran Abstract: The Philippine government intervenes in the domestic rice market through the imposition of import tariffs and the provision of producer and consumer subsidies. While policy makers are aware that these programs come with allocative efficiency costs, they justify the programs on the grounds that they insulate the domestic economy from unexpected price spikes in the international rice market. An interesting matter for policy evaluation is to quantify the insulation benefit that the programs provide in circumstances of sudden severe import price spikes. To examine this question, we undertake a dynamic CGE simulation in which the Philippines is subject to an external rice price shock. We find that the insulation benefit of the support programs under a 2008-like event is worth approximately 0.10 per cent of real consumption. However the cost of insuring against these price spikes is significant. We estimate the annual cost of the rice market interventions at approximately 0.40 per cent of real consumption. Classification-JEL: C68, Q18, H12, H21 Creation-Date: 2014-06 Keywords: Food security, food subsidies, rice tariff, rice market, price insulation File-URL: https://www.copsmodels.com/ftp/workpapr/g-245.pdf File-Format: Application/pdf File-Function: Initial version, 2014-06 File-URL: https://www.copsmodels.com/elecpapr/g-245.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Mariano, M., J.A. Giesecke and N.H. Tran. (2015), 'The effects of domestic rice market interventions outside business-as-usual conditions for imported rice prices', Applied Economics, Vol. 47, No. 8, February 2015, pp. 809-832. Handle: RePEc:cop:wpaper:g-245 Template-type: ReDIF-Paper 1.0 Title: Quantifying "Dog Days" Author-Name: J.M. Dixon Author-X-Name-First: J.M. Author-X-Name-Last: Dixon Author-Name: P.B. Dixon Author-X-Name-First: P.B. Author-X-Name-Last: Dixon Author-Name: J.A. Giesecke Author-X-Name-First: J.A. Author-X-Name-Last: Giesecke Author-Name: M.T. Rimmer Author-X-Name-First: M.T. Author-X-Name-Last: Rimmer Abstract: In his recent book "Dog Days", Garnaut (2013) argues that the Australian economy faces significant economic challenges, with a risk that just as the investment phase of the mining boom ends, Australia will be entering an economic environment characterised by declining terms of trade, a rising dependency ratio and rising world interest rates. In this paper, we evaluate the consequences of these challenges for key macroeconomic variables and per-capita measures of economic wellbeing using an economy-wide model. With plausible assumptions on key inputs to our model, we produce a scenario that is broadly consistent with the pessimistic picture for the immediate future of the Australian economy as portrayed in Dog Days. We forecast real per-capita incomes to fall at a rate of 0.3% p.a., so that by 2019/20 they have returned to the level of 2010/11. To maintain an unchanged unemployment rate over the forecast period, the average real wage must fall by 0.89% p.a., returning to its 2007/08 level by 2019/20. Fiscal consolidation sees damped growth in consumption. With real aggregate per-capita consumption falling at -079% p.a., it returns to its 2008/09 level by 2019/20. These are our forecast outcomes under an orderly adjustment scenario. However as Garnaut notes, there is a risk of mismanagement of the policy adjustments that will be required in the face of Australia's new economic realities. We simulate this through a scenario in which public and private consumption per capita, and real wages, initially remain at their 2013/14 levels, despite a decline in real per capita national income. The macroeconomic adjustments that this scenario entails ultimately generate significant economic volatility, with the unemployment rate rising to 6.6 per cent by 2015/16, before a 2.8% real wage fall in 2016/17 commences the process of returning the unemployment rate to its current level by 2019/20. Maintenance of our recent experience of rapid growth in per-capita income will require a substantial increase in multifactor productivity growth. In our third simulation, we model the size of the increase in multifactor productivity necessary to offset the forecast declining terms of trade, rising dependency ratio, and other forecast economic challenges. We find that the required rate of productivity growth, at 1.96% p.a., is of a level not seen in Australia since the last program of major structural reform in the 1990s. It seems unlikely that we can count on the tailwinds of any recent programs of micro reform to generate the levels of multifactor productivity growth that will be needed to maintain recent growth rates in real income. In our fourth simulation, we set a more modest goal, uncovering the productivity growth required to maintain, not increase, real per capita incomes. At 0.49% p.a., this rate is higher than the average productivity performance of the last decade, suggesting Australia faces a significant reform challenge in maintaining, let alone growing, real per capita incomes in the post-boom environment. Classification-JEL: C68, D58, F43, F16, O40 Creation-Date: 2014-07 Keywords: CGE modelling, dynamics, mining boom, productivity, economic growth, living standards File-URL: https://www.copsmodels.com/ftp/workpapr/g-246.pdf File-Format: Application/pdf File-Function: Initial version, 2014-07 File-URL: https://www.copsmodels.com/elecpapr/g-246.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Publication-Status: Published in Dixon, J.M., P.B. Dixon, J.A. Giesecke and M.T. Rimmer (2014) Quantifying 'Dog Days', Economic Papers, Vol 33, No. 3, September 2014, pp. 203-19. Handle: RePEc:cop:wpaper:g-246 Template-type: ReDIF-Paper 1.0 Title: Climate Change Mitigation, Economic Growth and the Distribution of Income Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: P.D. Adams Author-X-Name-First: P.D. Author-X-Name-Last: Adams Author-Name: Felicity Pang Author-X-Name-First: Felicity Author-X-Name-Last: Pang Abstract: In October 2008, the Australian Government released a major report: Australia's Low Pollution Future: The Economics of Climate Change Mitigation. In that report, various scenarios are used to explore the potential economic effects of climate mitigation policy in Australia. One of the scenarios, designated CPRS-5, a Carbon Pollution Reduction Scheme (CPRS) aims to reduce emissions to 5 per cent below 2000 levels by 2020. It is consistent with stabilisation at around 550 parts per million of carbon dioxide equivalent (ppm CO2-e) in the atmosphere by 2100. In assessing the likely effects these policies on the future growth of output and employment by industry, the Government's report relies mainly on economic modelling using the MMRF applied general equilibrium model of the Australian economy. Results are reported for 58 industries. This paper begins by using the same model to closely reproduce the analysis of the CPRS-5 scenario conducted for the report. However, this time the MMRF model is enhanced by a labour market extension MLME which allows the employment results to be extended to 81 occupations and 64 skill groups. The enhanced model is then used in a top-down configuration with an income distribution extension MIDE and a microsimulation extension MMSE to generate changes in income. In MIDE, income redistributions between households (taken collectively), corporate trading enterprises, financial trading enterprises, the government and foreigners (the 'institutions') are modelled by the inclusion of the associated current and capital accounts from the Australian System of National Accounts. Within the household sector, changes in disposable income from unincorporated enterprises (differentiated by 17 industries), compensation of employees (differentiated by 81 occupations), property income, and net transfers from other institutions are separately modelled. On the income side, one hundred types of recipient are identified corresponding to personal income percentiles. On the expenditure side, six hundred types of household are identified, this time differentiated by household income and the ages of its members. This arrangement allows changes in real income to be computed using household specific CPIs. The microsimulation extension MMSE uses MIDE results to update the incomes of more than 13,500 persons. The effects of the climate change mitigation policies on the incomes of various socio-economic groups are then be obtained by aggregation. Classification-JEL: C68, D31, D58, J23, O56, Q52 Creation-Date: 2014-09 Keywords: CGE modelling, climate change mitigation, distribution of employment, distribution of income, microsimulation File-URL: https://www.copsmodels.com/ftp/workpapr/g-247.pdf File-Format: Application/pdf File-Function: Initial version, 2014-09 File-URL: https://www.copsmodels.com/elecpapr/g-247.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-247 Template-type: ReDIF-Paper 1.0 Title: Interfacing a CGE Labour Market Model with the E3ME Multi-Sector Macroeconomic Model Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: Felicity Pang Author-X-Name-First: Felicity Author-X-Name-Last: Pang Author-Name: R.A. Wilson Author-X-Name-First: R.A. Author-X-Name-Last: Wilson Abstract: In recent years, a series of European labour market forecasts have been produced on behalf of, and have been published by, the European Centre for the Development of Vocational Training (CEDEFOP). These forecasts were generated using a modular modelling approach containing two major components: * a multi-sector macroeconomic model (E3ME) for 29 European countries, primarily developed and operated by Cambridge Econometrics, and * a labour market extension (WLME), primarily developed and operated by the Institute for Employment Research at the University of Warwick. The countries are treated as an integrated system in E3ME but the extension is applied to each country separately. Forecasts of employment by industry are determined by E3ME; forecasts of employment by occupation and qualification are determined by the extension. The two components rely mainly on time series econometric techniques to generate their forecasts. This paper describes how WLME can be replaced with an alternative extension (MLME) which incorporates a computable general equilibrium model. The CGE model has been developed primarily at the Centre of Policy Studies at Monash University. Compared to WLME, MLME relies less on time series extrapolation and more on explicitly modelled economic behaviour. This approach introduces a range of behavioural and technical parameters which offer more scope for modelling developments in the labour market which impact on occupations and skills rather industries. Forecasts produced using the new E3ME-MLME system are reported for the United Kingdom, Greece and the Netherlands, and compared with the corresponding forecasts produced using the existing E3ME-WLME system. The focus of the comparison is on qualitative differences in the way the two sets of forecasts are to be interpreted. In particular, the sense in which explicit specification of technical change and economic behaviour (in the new system) can be substituted for time series extrapolation techniques (in the existing system) is carefully considered. The primary objective of the paper, therefore, is to demonstrate the empirical feasibility of the alternative methodology rather than to produce robust alternative forecasts. Classification-JEL: C53, C58, D58, E27, J23, O41 Creation-Date: 2014-09 Keywords: Forecasting, CGE models, hybrid models, labour markets File-URL: https://www.copsmodels.com/ftp/workpapr/g-248.pdf File-Format: Application/pdf File-Function: Initial version, 2014-09 File-URL: https://www.copsmodels.com/elecpapr/g-248.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-248 Template-type: ReDIF-Paper 1.0 Title: Emerging Structural Pressures in European Labour Markets Author-Name: G.A. Meagher Author-X-Name-First: G.A. Author-X-Name-Last: Meagher Author-Name: R.A.Wilson Author-X-Name-First: Author-X-Name-Last: R.A.Wilson Author-Name: E.Yerushalmi Author-X-Name-First: Author-X-Name-Last: E.Yerushalmi Abstract: In recent years, a series of European labour market forecasts have been produced on behalf of, and have been published by, the European Centre for the Development of Vocational Training (Cedefop). These forecasts were generated using a modular modelling approach containing two major components, a multi-sector macroeconomic model (E3ME) for 29 European countries, and a labour market extension (WLME). The countries are treated as an integrated system in E3ME but the extension is applied to each country separately. Forecasts of employment by industry are determined by E3ME; forecasts of employment by occupation and qualification are determined by the extension. Both components rely mainly on time series econometric techniques to generate their forecasts. Meagher et al.(2014) describe how the WLME can be replaced with an alternative extension (MLME) which uses computable general equilibrium (CGE) modelling techniques. Compared to the WLME, the MLME relies less on time series analysis and more on explicitly modelled economic behaviour, based on theoretical considerations. In this paper, the design of the hybrid E3ME-MLME model is advanced in two ways. Firstly, MLME is configured such that, in the absence of any shocks and assuming that the occupational labour markets clear, it reproduces the forecasts derived using WLME. In that case, the MLME forecasts can be regarded as providing enhanced information about the WLME forecasts. In particular, MLME provides forecasts of changes in relative wage rates which can be used to identify structural pressures in the markets for labour, pressures which remain only implicit in the WLME employment forecasts produced for Cedefop. Secondly, when suitably configured, MLME can be used to determine the deviations to the WLME employment forecasts which would result if some of the conditions (either explicit or implicit) under which they were derived are relaxed. In particular, MLME is used to determine how the forecasts would be different if wage rates are not sufficiently flexible to clear the occupational labour markets. The attendant surpluses and shortages revealed by MLME provide corroborative evidence on the underlying structural pressures in the Cedefop forecasts. Results are reported for the United Kingdom, Greece and the Netherlands. Classification-JEL: C53, C58, D58, E27, J23, O41 Creation-Date: 2014-09 Keywords: Forecasting, CGE models, hybrid models, labour markets, structural imbalances File-URL: https://www.copsmodels.com/ftp/workpapr/g-249.pdf File-Format: Application/pdf File-Function: Initial version, 2014-09 File-URL: https://www.copsmodels.com/elecpapr/g-249.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-249 Template-type: ReDIF-Paper 1.0 Title: The Impact of LNG Export Expansion in Queensland, with special emphasis on the effects of increased gas prices Author-Name: Philip Adams Author-X-Name-First: Philip Author-X-Name-Last: Adams Abstract: The large Queensland LNG projects currently under construction will begin production over the next two years. Exploiting previously unused reserves of coal seam gas, the LNG produced will be sold at an international price which far exceeds the current price of natural gas in Eastern Australia. The new exports of LNG will therefore boost Australia's exports and terms of trade, leading to increased real GDP and welfare for the national economy. But this is only one part of the overall impacts of the new projects. Through competitive pressures, the price premium received for unconventional Queensland gas will lead to increased prices for gas throughout Eastern Australia. This will increase costs of production for energy-intensive industries. For those industries (and regions) which cannot pass on the cost increases, production will fall. In this paper, using the Victoria University Regional Model (VURM), we report on simulations designed to provide a balanced assessment of the costs and benefits of the new LNG projects. Key findings are: During construction, the projects boost real GDP and national welfare, and have a positive impact on most industries and most regional economies; During the mature, production phase, the national impacts are marginal. Real GDP is stimulated slightly, while national welfare is hardly affected. Some industries gain production, particularly electricity-related sectors that benefit from favourable price-induced substitution effects. Other industries lose production, due to the adverse cost impacts of increased gas and electricity prices. Because some industries gain, while other industries lose, so some regions gain real GSP and employment (Queensland), while other regions lose (notably Victoria and South Australia). The projects will lead to higher CO2-e emissions, due to the stimulus to coal-fired electricity. Classification-JEL: C68, D58, F43, O40 Creation-Date: 2014-11 Keywords: CGE modelling, Gas production, LNG exports, Australian economy File-URL: https://www.copsmodels.com/ftp/workpapr/g-250.pdf File-Format: Application/pdf File-Function: Initial version, 2014-11 File-URL: https://www.copsmodels.com/elecpapr/g-250.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-250 Template-type: ReDIF-Paper 1.0 Title: The implications for trade and FDI flows from liberalisation of China's capital account Author-Name: George Verikios Author-X-Name-First: George Author-X-Name-Last: Verikios Abstract: We model the partial liberalisation of the capital account by China using a dynamic CGE model of the world economy. Our results indicate that a reduced capital controls on FDI would lead to a significant increase in FDI capital in China and a significant reduction in the cost of capital in China relative to the rest of the world. Further, we observe an increase in capital stocks in all regions, which benefits all regions in terms of GDP and GNP. The economies of China (1.7%), East Asia (1.3%) and Australia/New Zealand (0.5%) grow most strongly. The rental price of capital falls significantly in these regions, which lowers domestic costs and they experience a real depreciation of the exchange rate and thus increased exports relative to other regions. We also observe an across-the-board increase in the saving rate driven by the rise in the price of consumption relative to investment (saving) in all regions. Classification-JEL: C68, E22, F21, F23, F38, F40 Creation-Date: 2015-01 Keywords: capital controls, China, computable general equilibrium, FDI, multinational firms, trade File-URL: https://www.copsmodels.com/ftp/workpapr/g-251.pdf File-Format: Application/pdf File-Function: Initial version, 2015-01 File-URL: https://www.copsmodels.com/elecpapr/g-251.htm File-Format: Text/html File-Function: Local abstract: may link to additional material. Handle: RePEc:cop:wpaper:g-251 Template-type: ReDIF-Paper 1.0 Title: Alternative Approaches to Fee Flexibility: Towards a Third Way in Higher Education Reform in Australia Author-Name: P. J. Dawkins Author-X-Name-First: P. J. Author-X-Name-Last: Dawkins Author-Name: J.M. Dixon Author-X-Name-First: J.M. Author-X-Name-Last: Dixon Abstract: A major issue for the future of tertiary education is to ensure that Australia continues to expand its investment in skills and capabilities, to enable a future of prosperity which is available to all. This has been the aim of the demand-driven system of higher education. The Federal Government's current proposals for higher education reform include the expansion of the demand-driven system, by bringing sub-degree higher education programs into the subsided system and by bringing non-university higher education providers into the system. At the same time the government has been seeking to achieve budget restraint and as a result proposed to cut the amount of funding per student by an average of 20 per cent, although there is considerable variation across the disciplines. The government has also proposed to uncap fees, so that universities could at least recoup the lost funds due to the cuts in subsidies. The government's proposal for full-fee deregulation in higher education has stalled in the Senate. It has been subjected to criticism from the cross-benchers and from a number of expert commentators that there are serious risks with the proposal including the risk of excessive student fees and excessive debts. We argue that what is required is not full deregulation of fees, or a return to a more regulated model with tight fee regulation and a possible reversion to more regulation of student numbers as well. What is required is a 'third way' incorporating some degree of price flexibility, and an enhanced equity package, while retaining the demand driven model. This paper, therefore, is concerned with exploring alternative ways of sustaining the demand driven system by allowing some degree of flexibility in student fees, while avoiding excessive fee rises and allowing for some degree of price competition. Consideration is also given to ways in which the equity aspects of the package could be enhanced. Dawkins (2014) argued that three alternative methods should be explored to achieve a degree of fee flexibility: fee caps, loan caps and a 'taper model' whereby government tuition subsidies are reduced according to a taper-rate schedule, when they raise fees above a threshold level. The latter concept is one that is also being proposed by Bruce Chapman (Chapman 2015). Our analysis and consideration of the policy challenge leads us to the conclusion that the most promising way forward is a two-part package incorporating