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Superannuation within a financial CGE model of the Australian economy

Author

Listed:
  • Peter B. Dixon
  • James. A. Giesecke
  • Maureen T. Rimmer

Abstract

Australia's superannuation sector has become both a major institution in guiding the allocation of the nation's financial capital across asset classes, regions, and sectors, and a central intermediary in channelling the nation's annual savings into domestic capital formation and foreign financial asset accumulation. To put the industry's scale in context, in 2012 the sector had assets under management of approximately $1.4tn (Australia's GDP in the same year was approximately $1.5tn). Annual inflows to the system represent approximately one third of gross national savings. The sector's influence over the allocation of the nation's physical and financial assets continues to grow. We model this important institution within an economy-wide setting by embedding explicit modelling of the sector within a model of the financial sector which is in turn linked to a dynamic multi-sectoral CGE model of the real side of the economy. We develop the financial CGE model by building on a multi-sectoral dynamic model of the real side of the Australian economy. In particular, we introduce explicit treatment of: (i) financial intermediaries and the agents with which they transact; (ii) financial instruments describing assets and liabilities; (iii) the financial flows related to these instruments; (iv) rates of return on individual assets and liabilities; and (v) links between the real and monetary sides of the economy. We explore the effects of the superannuation sector by simulating a one percentage point increase in the ratio of superannuation contributions to the economy-wide nominal wage bill.

Suggested Citation

  • Peter B. Dixon & James. A. Giesecke & Maureen T. Rimmer, 2015. "Superannuation within a financial CGE model of the Australian economy," Centre of Policy Studies/IMPACT Centre Working Papers g-253, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-253
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    References listed on IDEAS

    as
    1. Ellis Connolly, 2007. "The Effect of the Australian Superannuation Guarantee on Household Saving Behaviour," RBA Research Discussion Papers rdp2007-08, Reserve Bank of Australia.
    2. Janine M. Dixon & Peter B. Dixon & James A. Giesecke & Maureen T. Rimmer, 2014. "Quantifying “Dog Days”," Economic Papers, The Economic Society of Australia, vol. 33(3), pages 203-219, September.
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    Citations

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    Cited by:

    1. John Freebairn, 2018. "Opportunities and Challenges for CGE Models in Analysing Taxation," Economic Papers, The Economic Society of Australia, vol. 37(1), pages 17-29, March.
    2. Jason N. Harris & Jason Nassios & James A. Giesecke, 2017. "Determining agent-specific rates of return in a Financial CGE model of Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-270, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. James A. Giesecke & Peter B. Dixon & Maureen T. Rimmer, 2016. "The Economy-wide Impact of a Rise in Commercial Bank Capital Adequacy Ratios," Centre of Policy Studies/IMPACT Centre Working Papers g-261, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Giesecke, James & Dixon, Peter & Rimmer, Maureen, 2016. "The costs and benefits of financial regulation: A financial CGE assessment of the impact of a rise in commercial bank capital adequacy ratios," Conference papers 332731, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Garaffa, Rafael & Gurgel, Angelo & Cunha, Bruno & Lucena, Andre & Szklo, Alexandre & Schaeffer, Roberto & Rochedo, Pedro, 2018. "Climate finance under a CGE framework: decoupling financial flows in GTAP database," Conference papers 332939, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Nassios, J. & Waschik, Robert & Dixon, P.B. & Rimmer, M., 2020. "Evaluating the impact of automation in long-haul trucking in the United States using USAGE-Hwy," Conference papers 333205, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Jason Nassios & James A. Giesecke & Peter B. Dixon & Maureen T. Rimmer, 2016. "Superannuation and Macroeconomic Growth and Stability," Centre of Policy Studies/IMPACT Centre Working Papers g-267, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. J.M. Dixon & J. Nassios, 2016. "Modelling the Impacts of a Cut to Company Tax in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-260, Victoria University, Centre of Policy Studies/IMPACT Centre.
    9. Nassios, Jason & Giesecke, James & Dixon, Peter & Rimmer, Maureen, 2017. "Comparing the impacts of financial regulation in Australia and the United States using country-specific financial CGE models," Conference papers 332891, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Jason Nassios & James A. Giesecke & Peter B. Dixon & Maureen T. Rimmer, 2016. "A modelling framework for analysing the role of superannuation in Australia's financial system," Centre of Policy Studies/IMPACT Centre Working Papers g-266, Victoria University, Centre of Policy Studies/IMPACT Centre.
    11. Nassios, Jason & Giesecke, James A. & Dixon, Peter B. & Rimmer, Maureen T., 2019. "Mandated superannuation contributions and the structure of the financial sector in Australia," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 859-881.
    12. Esmedekh Lkhanaajav, 2016. "CoPS-style CGE modelling and analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-264, Victoria University, Centre of Policy Studies/IMPACT Centre.

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    More about this item

    Keywords

    Financial CGE model; superannuation;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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