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FEDERAL : a two-region multisectoral fiscal model of the Australian economy


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Madden, John R 1990 , 'FEDERAL : a two-region multisectoral fiscal model of the Australian economy', PhD thesis, University of Tasmania.

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This thesis is concerned with the construction and testing
of a two-region computable general equilibrium (CGE) model. The
model, entitled FEDERAL, is designed to allow detailed analysis of
regional and national economic shocks within a federal economic
system. Although containing some Australian institutional features,
FEDERAL's theory could easily be adapted to another market-oriented
economy which has a federal system.
The first chapter of the thesis outlines previous work in
CGE regional modelling while Chapter 2 develops FEDERAL's
theoretical structure, using the well-known ORANI model - as
described in Dixon, Parmenter, Sutton and Vincent (1982) - as its
starting point. The principal new features of FEDERAL are:
it is a multi-regional model
it contains extensive modelling of two tiers of
government finance (i.e. Commonwealth and State)
it contains detailed modelling of regional income.
The multi-regional form of FEDERAL adds a new layer of
complexity as compared with ORANI. This is particularly the case
with the modelling of margin industries (trade, transport and
insurance). FEDERAL carries this detailed area of ORANI into full
multi-regional complexity by modelling the provision of margin
services supplied on the flow of each individual commodity in
intraregional, interregional and international trade by each region
of margin supply.
The modelling of two tiers of government introduces a vast
array of Commonwealth and state taxes and subsidies affecting the
decisions of economic agents in each region. FEDERAL also models in detail current and capital expenditure by governments, transfers to
persons, intergovernmental transfers and, via a set of receipts and
outlays accounts, the three governments' borrowing requirements.
A feature of the modelling of regional disposable income
is the track kept of foreign and interregional ownership of capital
in each regional industry.
The third chapter outlines FEDERAL's data-base while
Chapter 4 looks at the construction of the data-base for the
9-industry implemented version - the two regions being Tasmania, the
state of interest, and mainland Australia. Techniques are devised
to individually estimate each of the required 115 input-output data
Chapter 5 discusses testing the model's homogeneity
properties and analyses the results of some illustrative simulations
examining the effects of national (tariff) and regional (payroll
tax) shocks. The results of these simulations are used to draw out
key features of the model's structure.
The final chapter provides a brief overview and considers
future research - both in terms of model applications and possible
areas of improvement in the model's structure.

Item Type: Thesis - PhD
Authors/Creators:Madden, John R
Keywords: Finance, Public
Copyright Holders: The Author
Copyright Information:

Copyright 1990 the Author

Additional Information:

Thesis (Ph.D.)--University of Tasmania, 1991. Includes bibliographical references (leaves [329]-333)

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