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An Inter‐temporal General Equilibrium Econometric Model for a Small Open Economy with Application to Australia

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  • Sang‐Hee Han
  • Alan D. Woodland

Abstract

An inter‐temporal general equilibrium econometric model is developed for the Australian economy and used to simulate a trade policy. The model treats the prices of non‐traded goods as endogenous and takes account of the inter‐temporal optimality conditions implicit in the determination of saving, capital formation and the price of new investment. Utilising quarterly Australian data, the model is estimated by the method of full information maximum likelihood. Estimates of supply and demand elasticities are presented and discussed. Finally, the model is used to simulate the effects upon the economy over time of anticipated and unanticipated changes in the tariff rate.

Suggested Citation

  • Sang‐Hee Han & Alan D. Woodland, 2003. "An Inter‐temporal General Equilibrium Econometric Model for a Small Open Economy with Application to Australia," The Economic Record, The Economic Society of Australia, vol. 79(244), pages 1-19, March.
    • Handle: RePEc:bla:ecorec:v:79:y:2003:i:244:p:1-19
    DOI: 10.1111/1475-4932.00075
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    References listed on IDEAS

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    2. Peter B. Dixon & Maureen T. Rimmer, 1999. "Changes in Indirect Taxes in Australia: A Dynamic General Equilibrium Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(4), pages 327-348, December.
    3. Ulrich R. Kohli, 1978. "A Gross National Product Function and the Derived Demand for Imports and Supply of Exports," Canadian Journal of Economics, Canadian Economics Association, vol. 11(2), pages 167-182, May.
    4. Burgess, David F, 1974. "A Cost Minimization Approach to Import Demand Equations," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 225-234, May.
    5. Persson, Torsten & Svensson, Lars E O, 1985. "Current Account Dynamics and the Terms of Trade: Harberger-Laursen-Metzler Two Generations Later," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 43-65, February.
    6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Narayanan, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models," Economic Modelling, Elsevier, vol. 27(3), pages 755-766, May.
    2. Narayanan, Badri & Thomas Hertel & Mark Horridge, 2010. "Linking Partial and General Equilibrium Models: A GTAP Application Using TASTE," GTAP Technical Papers 3192, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.

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