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Reform of Australian Urban Transport: A CGE-Microsimulation Analysis of the Effects on Income Distribution

  • George Verikios
  • Xiao-guang Zhang

Australian urban transport industries experienced substantial reform during the 1990s leading to significant structural change. Urban transport is typically an important expenditure item for households and structural change in these services may affect households differently depending on their position in the distribution of income and expenditure. We estimate the effects on household income groups of this structural change by applying a computable general equilibrium model incorporating microsimulation behaviour with top-down and bottom-up links. We compare estimates based on a pure microsimulation approach, a top-down approach and a hybrid top-down/bottom-up approach. We estimate small reductions in real income and small reductions in inequality; this pattern is largely replicated across regions. Our results are insensitive to the inclusion of bottom-up links; in contrast, applying a pure microsimulation approach gives accurate results at the aggregate level but underestimates the variation in effects across deciles and regions.

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Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-239.

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Date of creation: Dec 2013
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Handle: RePEc:cop:wpaper:g-239
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  1. W. Jill Harrison & K.R. Pearson, 1994. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Centre of Policy Studies/IMPACT Centre Working Papers ip-64, Victoria University, Centre of Policy Studies/IMPACT Centre.
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  3. John Quiggin, 1997. "Estimating the Benefits of Hilmer and Related Reforms," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 30(3), pages 256-272.
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  8. Daniel Benitez & Omar Chisari & Antonio Estache, 2003. "Can the gains from Argentina's utilities reform offset credit shocks?," Chapters, in: Utility Privatization and Regulation, chapter 8 Edward Elgar.
  9. John Cockburn & Erwin L. Corong & Caesar B. Cororaton, 2008. "Poverty Effects of the Philippines' Tariff Reduction Program: Insights from a Computable General Equilibrium Analysis ," Asian Economic Journal, East Asian Economic Association, vol. 22(3), pages 289-319, 09.
  10. Andersen, Lykke Eg & Faris, Robert, 2002. "Natural Gas and Income Distribution in Bolivia," Documentos de trabajo 1/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  11. Luc SAVARD, . "Scaling Up Infrastructure Spending in the Philippines: A CGE Top-Down Bottom-Up Microsimulation Approach," EcoMod2010 259600150, EcoMod.
  12. 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, 03.
  13. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
  14. Philip D. Adams & J. Mark Horridge & Brian R. Parmenter, 2000. "MMRF-GREEN: A Dynamic, Multi-Sectoral, Multi-Regional Model of Australia," Centre of Policy Studies/IMPACT Centre Working Papers op-94, Victoria University, Centre of Policy Studies/IMPACT Centre.
  15. Horridge, Mark & Madden, John & Wittwer, Glyn, 2005. "The impact of the 2002-2003 drought on Australia," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 285-308, April.
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