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Modelling Economy-wide Effects of Future Automotive Assistance

Author

Listed:
  • Productivity Commission

Abstract

The Commission’s modelling indicates that there would be economy–wide benefits from further reductions in assistance to the automotive sector, particularly for tariffs. It also suggests that the benefits would be larger under the current assistance reduction program than options entailing lesser reductions. The model projected potential net benefits to the community of some $0.5 billion a year under this program, with gains to consumers and other industries outweighing negative impacts on the automotive industry. Modelling also confirms that a significant further appreciation of Australia’s currency, associated with the mining boom, would have a much greater impact on the automotive industry than scheduled tariff reductions. In the Commission’s assessment, these conclusions are not materially affected by consideration of factors, such as adjustment costs and scale economies, not captured directly by the model.

Suggested Citation

  • Productivity Commission, 2008. "Modelling Economy-wide Effects of Future Automotive Assistance," Research Reports, Productivity Commission, Government of Australia, number 30.
  • Handle: RePEc:ris:prodcs:30
    Note: 150 pages
    as

    Download full text from publisher

    File URL: http://www.pc.gov.au/__data/assets/pdf_file/0008/80765/automodelling.pdf
    Download Restriction: no

    File URL: http://www.pc.gov.au/projects/study/automodelling/finalreport
    Download Restriction: no

    References listed on IDEAS

    as
    1. Snape, Richard H, 1977. "Trade Policy in the Presence of Economies of Scale and Product Variety," The Economic Record, The Economic Society of Australia, vol. 53(144), pages 525-534, December.
    2. Dixon, Peter B, 1978. "Economies of Scale, Commodity Disaggregation and the Costs of Protection," Australian Economic Papers, Wiley Blackwell, vol. 17(30), pages 63-80, June.
    3. Kaludura Abayasiri-Silva & Mark Horridge, 1996. "Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-84, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Mark Horridge & John Madden & Glyn Wittwer, 2003. "Using a highly disaggregated multi-regional single-country model to analyse the impacts of the 2002-03 drought on Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-141, Victoria University, Centre of Policy Studies/IMPACT Centre.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Peter B. Dixon, 2009. "Comments on the Productivity Commission's Modelling of the Economy-Wide Effects of Future Automotive Assistance," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 11-18, March.
    2. Dixon, Peter B. & Rimmer, Maureen T., 2013. "Validation in Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier.
    3. Jonathan Pincus, 2009. "Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(2), pages 121-130.

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