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Using a Highly Disaggregated Multi-Regional Single-Country Model to Analyse the Impacts of the 2002-03 Drought on Australia

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  • Horridge, Mark
  • Madden, John
  • Wittwer, Glyn

Abstract

TERM (The Enormous Regional Model) is a "bottom-up" CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disaggregated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regional impacts of shocks that may be region-specific. We include some details of how we prepared the TERM database, using a national input-output table, together with regional data showing output (for agriculture) and employment (in other sectors) for each of 144 sectors and 57 regions [the Australian statistical divisions]. Using a 38-sector, 45-region aggregation of the model, we simulate the short-run effects of the Australian drought of 2002-03, which was the most widespread for 20 years. The effects on some statistical divisions are extreme, with income losses of up to 20 per cent. Despite the relatively small share of agriculture in Australian GDP, the drought reduces GDP by 1.6 per cent, and contributes to a decline in unemployment and to a worsening of the balance of trade.

Suggested Citation

  • Horridge, Mark & Madden, John & Wittwer, Glyn, 2003. "Using a Highly Disaggregated Multi-Regional Single-Country Model to Analyse the Impacts of the 2002-03 Drought on Australia," Conference papers 331074, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331074
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    Cited by:

    1. R. Azzoni, Carlos & A. Haddad, Eduardo & P. Domingues, Edson & Perobelli, Fernando, 2005. "Using interregional Multipliers to Compute the Efficiency-equity Trade-off at the Sub-national level: an Application to a Brazilian State," TD NEREUS 11-2005, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    2. Marcos Minoru Hasegawa, 2010. "The Tax Policy in the Chilean Economy: a Regional Applied General Equilibrium Analysis," Documentos de Trabajo en Economia y Ciencia Regional 05, Universidad Catolica del Norte, Chile, Department of Economics, revised Dec 2010.
    3. Glyn Wittwer & Mark Horridge, 2010. "Bringing Regional Detail to a CGE Model using Census Data," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(2), pages 229-255.
    4. Wittwer, Glyn & Griffith, Marnie, 2010. "Closing the factory doors until better times: CGE modelling of drought using a theory of excess capacity," Conference papers 331997, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Horridge, Mark & Wittwer, Glyn, 2008. "SinoTERM, a multi-regional CGE model of China," China Economic Review, Elsevier, vol. 19(4), pages 628-634, December.
    6. Glyn Wittwer & Simon McKirdy & Ryan Wilson, 2005. "Regional economic impacts of a plant disease incursion using a general equilibrium approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 75-89, March.
    7. Mushtaq, Shahbaz & Cockfield, Geoff & White, Neil & Jakeman, Guy, 2014. "Modelling interactions between farm-level structural adjustment and a regional economy: A case of the Australian rice industry," Agricultural Systems, Elsevier, vol. 123(C), pages 34-42.
    8. Pham Van Ha & Hoa Thi Minh Nguyen & Tom Kompas & Tuong Nhu Che & Bui Trinh, 2015. "Rice Production, Trade and the Poor: Regional Effects of Rice Export Policy on Households in Vietnam," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(2), pages 280-307, June.
    9. Productivity Commission, 2008. "Modelling Economy-wide Effects of Future Automotive Assistance," Research Reports, Productivity Commission, Government of Australia, number 30.
    10. Jayatilleke S. Bandara & Athula Naranpanawa, 2007. "The Economic Effects of the Asian Tsunami on the ‘Tear Drop in the Indian Ocean’," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 8(1), pages 65-85, January.
    11. Andrew Leigh, 2009. "Precipitation, Profits, and Pile-Ups," CEPR Discussion Papers 629, Centre for Economic Policy Research, Research School of Economics, Australian National University.

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    More about this item

    Keywords

    Research Methods/ Statistical Methods; Environmental Economics and Policy;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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