The Effects of Current Fiscal Restraint on the Australian Economy: an Applied General Equilibrium Analysis with Imperfect Competition
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 imperfect competition. The paper describes a 23-sector computable general equilibrium model of the Australian economy, and covers short-run as well as long-run profit-maximising 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.
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- Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
- Harris, Richard, 1984.
"Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition,"
American Economic Review,
American Economic Association, vol. 74(5), pages 1016-1032, December.
- Richard Harris, 1983. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," Working Papers 524, Queen's University, Department of Economics.
- Devarajan, Shantayanan & Rodrik, Dani, 1989. "Trade Liberalization in Developing Countries: Do Imperfect Competition and Scale Economies Matter?," American Economic Review, American Economic Association, vol. 79(2), pages 283-287, May.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975.
"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
64, University of Warwick, Department of Economics.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
- 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.
- Hertel, Thomas & Lanclos, D. Kent & Thursby, Marie, 1991. "General Equilibrium Effects of Trade Liberalization in the Presence of Imperfect Competition," 1991 Conference, August 22-29, 1991, Tokyo, Japan 183247, International Association of Agricultural Economists.
- Randall Wigle, 1988. "General Equilibrium Evaluation of Canada-U.S. Trade Liberalization in a Global Context," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 539-564, August.
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