The sectoral and macroeconomic implications of trade liberalisation in Australia : a CGE simulation

Nott, Ailsa. (1996). The sectoral and macroeconomic implications of trade liberalisation in Australia : a CGE simulation Master's Thesis, School of Economics, The University of Queensland.

       
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Author Nott, Ailsa.
Thesis Title The sectoral and macroeconomic implications of trade liberalisation in Australia : a CGE simulation
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1996
Thesis type Master's Thesis
Total pages 100
Language eng
Subjects 14 Economics
Formatted abstract Protection for Australian industries has spanned several decades. Such trade distortions counter the lessons of pure trade theories which demonstrate that free trade enlarges the trade triangle and provides Pareto optimality in a welfare sense. A government crafted initiative to reduce levels of protection raises the prospect of a free trade scenario by 2020, thus, exposing sheltered industries to the fresh winds of competition.

This study examines empirically the outcome of implementing a policy of reduced protection and develops a forecast of macroeconomic and sectoral effects over a planning horizon of seven years. A closure that captures the government's trade liberalisation policy commitment is specified, by including a 25% across-the-board tariff cut, and it is used to simulate the macroeconomic and sectoral effects of trade liberalisation. The study uses a CGE model of the ORANI-F type and is solved using the Johansen one-step linearisation technique. A detailed discussion of the theoretical structure and the data requirements for validating a CGE model is provided. Data from the 109 sector National Input-Output Tables are aggregated to a 27 sector table and updated to 1992-3 figures. The GEMPACK suite of software is used for CGE modelling in this study. The findings of the simulation suggest that there are both gains and losses through implementing trade liberalisation policies. From a Pareto welfare perspective if the potential gainers can compensate the losers and still be better off then trade liberalisation policy would be worthwhile from a national welfare standpoint.

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
 
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