Comments on the Productivity Commission's Modelling of the Economy-Wide Effects of Future Automotive Assistance
The Productivity Commission claims on the basis of computable general equilibrium modelling that a seemingly small reduction in assistance to the Australian Automotive industry (a cut in tariffs from 10 per cent to 5 per cent and elimination of the ACIS scheme) would generate an annual welfare benefit of about $500 million. I explain that this implausible result rests on an implicit manna-from-heaven assumption. Using results published by the Commission, I rework their welfare calculations. With parameter values favoured by them, the corrected annual welfare gain is $66 million. With what I consider more realistic parameter values, the welfare effect is negative. Copyright (c) 2009 The Economic Society of Australia.
Year of publication: |
2009
|
---|---|
Authors: | Dixon, Peter B. |
Published in: |
Economic Papers. - Economic Society of Australia - ESA. - Vol. 28.2009, 1, p. 11-18
|
Publisher: |
Economic Society of Australia - ESA |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Global Supply Chains : Towards A Computable General Equilibrium Analysis
Athukorala, Prema-chandra, (2018)
-
An explanation of structural changes in the Australian economy : 1986 - 87 to 1990 - 91
Dixon, Peter B., (1993)
-
Applied general equilibrium modelling : achievement, failure and potential
Dixon, Peter B., (1993)
- More ...