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How Reliable are ORANI Conclusions?

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  • A. R. PAGAN
  • J. H. SHANNON

Abstract

This paper seeks to systematically review the main criticisms of the ORANI model by developing a graphical version of a two‐sector (exportables and nonexportables) miniature ORANI model. This model shows that ORANI results occur because while supply curves in both sectors have similar slopes. the slopes of the demand curves are polar opposites. Furthermore this model shows that results will tend to be more sensitive to variations in supply rather than demand parameters. Experiments using the ORANI model itself verified these findings. These results indicate that some form of sensitivity analysis with respect to assigned parameter values should form an integral part of any ORANI experiment.

Suggested Citation

  • A. R. Pagan & J. H. Shannon, 1987. "How Reliable are ORANI Conclusions?," The Economic Record, The Economic Society of Australia, vol. 63(1), pages 33-45, March.
    • Handle: RePEc:bla:ecorec:v:63:y:1987:i:1:p:33-45
    DOI: 10.1111/j.1475-4932.1987.tb00635.x
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    References listed on IDEAS

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    7. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
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    10. Kapuscinski, Cezary A. & Warr, Peter G., 1999. "Estimation of Armington elasticities: an application to the Philippines," Economic Modelling, Elsevier, vol. 16(2), pages 257-278, April.
    11. Touhami Abdelkhalek & Jean-Marie Dufour, 1998. "Statistical Inference For Computable General Equilibrium Models, With Application To A Model Of The Moroccan Economy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 520-534, November.
    12. Hertel, Thomas, 2013. "Global Applied General Equilibrium Analysis Using the Global Trade Analysis Project Framework," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 815-876, Elsevier.
    13. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1213-1269, Elsevier.
    14. Michael Malakellis & Matthew Peter, 1991. "Stimulation of Employment in Neo-Classical Models," Centre of Policy Studies/IMPACT Centre Working Papers ip-49, Victoria University, Centre of Policy Studies/IMPACT Centre.

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