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Macro and Micro Impacts of Structural Reforms in Papua New Guinea: A Computable General Equilibrium Analysis

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  • Asafu-Adjaye, John

    (School of Economics, The University of Queensland, St. Lucia, Queensland 4072 Australia)

Abstract

The Papua New Guinea economy has been subjected to a series of external shocks, starting with the Bougainville war in 1989. The government has responded with a series of structural reforms, with the most recent one being implemented in 2000. This paper employs a computable general equilibrium model to evaluate the impacts of the government's reform policies. Policies simulated are reduction in current government expenditure, reduction in real wages, tariff cuts and a goods and services tax. The results show that the export-oriented and government sectors benefit. However, the service sectors are adversely affected. While the rural population could benefit from the reforms, a case is made for increased government investment spending in these areas to stem the rural-urban drift.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 33 (2003)
Issue (Month): 1 (March)
Pages: 1-22

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Handle: RePEc:eap:articl:v:33:y:2003:i:1:p:1-22

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