Explaining regional economic performance: An historical application of a dynamic multi-regional CGE model

A multi-regional dynamic computable general equilibrium model of the Australian economy (federal-f) is used to identify the causes of the divergent growth performance of two Australian regional economies (Tasmania and the rest of Australia) over the period 1992-1993 to 1998-1999. These causes are traced to a large number of structural and policy changes in the two economies. Ultimately, no simple or mono-causal explanation for the divergent growth experience is found - the relatively slow growth of the Tasmanian economy is the net effect of a large number of countervailing influences. Nevertheless, from among these many influences, it is possible to distinguish those that had a sizeable impact from those that had a negligible impact.