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THE EFFECTS OF CURRENT FISCAL RESTRAINT ON THE AUSTRALIAN ECONOMY: An Applied General Equilibrium Analysis with Imperfect Competition

Author

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  • Abayasiri-Silva, Kaludura
  • Horridge, Mark

Abstract

The objective of this paper is to examine the short run and long run effects of the reduction of government expenditure on the Australian economy using an applied general equilibrium model, which incorporates economies of scale and impediect competition. The paper describes a 23-sector computable general equilibrium model of the Australian economy, and covers short-run as well as long-run profitmaximising behaviour of the firm. Economies of scale are incorporated in the model at the industry level and the firm level. The pricing behaviour is modelled as perfectly competitive, monopolistically competitive and in other ad hoc ways, as in Harris (1984). The different assumptions about technology, pricing behaviour and firm entry are combined in various ways to produce a variety of scenarios in our simulations. We present results for three different types of non-competitive regime and compare these with results generated by a traditional version of the same model.

Suggested Citation

  • Abayasiri-Silva, Kaludura & Horridge, Mark, "undated". "THE EFFECTS OF CURRENT FISCAL RESTRAINT ON THE AUSTRALIAN ECONOMY: An Applied General Equilibrium Analysis with Imperfect Competition," Center of Policy Studies (COPS) Impact Project Papers 266362, Monash University Center of Policy Studies.
    • Handle: RePEc:ags:copspp:266362
    DOI: 10.22004/ag.econ.266362
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    2. Tchouamou Njoya, Eric, 2020. "An analysis of the tourism and wider economic impacts of price-reducing reforms in air transport services in Egypt," Research in Transportation Economics, Elsevier, vol. 79(C).
    3. Betarelli, Admir Antonio & Domingues, Edson Paulo & Hewings, Geoffrey John Dennis, 2020. "Transport policy, rail freight sector and market structure: The economic effects in Brazil," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 1-23.

    More about this item

    Keywords

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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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