Forestry and wood-based industries in the Australian economy: a computable general equilibrium analysis [ORANI model]

Bruce, I.A.

Forestry and wood-based industries in the Australian economy: a computable general equilibrium analysis [ORANI model]

1988

Bruce, I.A. (Industries Assistance Commission, Belconnen (Australia))

The ORANI model of the Australian economy is used to quantify the short-run impact of a range of economic changes on the forestry and wood-based industries. The following economic changes are scrutinised: increased costs in the Forestry and Logging, Sawmill Products (including woodchips), and Pulp, Paper and paperboard industries; increased afforestation; higher woodchip exports; higher real labour costs to employers; and an expansion in real absorption. Industry-specific policies are revealed to have relatively small macro-economic effects when contrasted with the projection of economy-wide labour cost and demand increases. The major finding is that indirect general equilibrium effects can be significant, especially those pertaining to Australia's international competitiveness. The outcomes of using a computable general equilibrium model, such as ORANI, compared with more restrictive models, are that a much richer analysis is possible and that it yields multipliers which are generally smaller. National employment multipliers of 1.2 for increased woodchip exports and 1.8 for increased afforestation are found, which compares with recent Leontief-type studies that estimated State multipliers of up to 12.2 and 3.4 respectively.

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