A Perspective on Energy Modelling in Australia

The NIF modelling team have redesigned NIF88. A number of important developments of a primarily single equation nature have been reported. There have also been major beneficial changes in the model's dynamics with certain short run adjustments now being much more rapid and the model's run properties said to be satisfactory. The model is clearly far more classical in nature than previously but probably for somewhat different reasons than are RBII and AMPS/Murphy.But on the negative side the overall speed of the NIF redesign process to date has probably not been sufficient to keep ahead of the challenges posed by the ever changing nature of the macro environment. It also remains basically unclear to would-be outside evaluators, what a number of equations are and what economic properties the basic structure of the model has. Furthermore, given the implications of much of the structure, it is not yet clear why the long-run (including "neutrality") properties seem so fortuitously satisfactory. Whether the model will be able to assist in the formation of views on the two important debt sustainability issues is also yet to be explained