Integrated Macro-Micro-Modelling Under Rational Expectations: With an Application to Tariff Reform in Australia(Contributions to Economics)

This book provides a comprehensive account of the theoretical structures, database, computation and application of ORANI-INT. ORANI-INT is a multi-period elaboration of ORANI, a well-known computable general equilibrium model of the Australian economy.The implications of assuming that expectations are model consistent are contrasted with those of the alternative assumption that expectations are static. A generic algorithm for solving a wide range of economic models is described in detail. The algorithm is portable because it is implemented in GEMPACK, a commercially available software package. The major application reported in the book addresses the issue whether tariff reform policies should be announced ahead of their implementation. Many of the multisectoral models used throughout the world are static. The methodology presented in the book demonstrates that such models can be easily embedded into an intertemporal framework.

Table of Contents:
1 Introduction: Scope and Purpose.- 1.1 Introduction.- 1.2 State of the Art.- 1.3 Contributions of this Book.- 1.4 Organisation of the Remainder of this Book.- 2 An Overview of Orani-Int.- 2.1 Introduction.- 2.2 Nomenclature for Intertemporal Modelling.- 2.3 The Structure of ORANI-INT.- 2.4 Chapter Summary.- 3 The Theoretical Structure of Orani-Int.- 3.1 Introduction.- 3.2 Industry Behaviour.- 3.3 Final Demands.- 3.4 Zero Pure Profits Conditions.- 3.5 Market Clearing Conditions.- 3.6 Miscellaneous Equations.- 3.7 Chapter Summary.- Appendix A3.1 The Log-Linear form of the Orani-Int Equation System.- Appendix A3.3 Alternative Investment Specifications.- Appendix A3.4 The Implications of the Irreversibility Constraint on Investment.- Appendix A3.5 A Note on Divisia Indexes.- 4 Solution Method.- 4.1 Introduction.- 4.2 Alternative Solution Methods.- 4.3 The ORANI-INT Solution Algorithm.- 4.4 Modelling Sign Constraints.- 4.5 Chapter Summary.- 5 Generating the Control Path Solution.- 5.1 Introduction.- 5.2 Constructing an Intertemporal Base Solution.- 5.3 The Control Scenarios.- 5.4 Chapter Summary.- Appendix A5.1 The ORani- 13 Database.- 6 Orani-Int’s Simulation Properties with and without Forward-Looking Behaviour.- 6.1 Introduction.- 6.2 An Overview of the Illustrative Experiments.- 6.3 Interpretation of Results.- 6.4 The Benchmark Experiment.- 6.5 The Investment Experiment.- 6.6 The Consumption Experiment.- 6.7 The Full Intertemporal Experiment.- 6.8 The Surprise Experiment.- 6.9 Chapter Summary.- 7 Should Tariff Reductions Be Announced?.- 7.1 Introduction.- 7.2 Simulating the Tariff Reduction Strategies.- 7.3. Simulation Results.- 7.4. Summary and Conclusions.- 8 Summary and Conclusions.- 8.1 Introduction.- 8.2 Model Development.- 8.3 Applications.- 8.4 An Agenda forFuture Research.- 8.5 Final Comments.- References.- Author Index.- List of Tables.- List of Figures.