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The Potential Benefits of Hilmer and Related Reforms: Electricity Supply
Author(s) -
Whiteman John
Publication year - 1999
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.00090
Subject(s) - inefficiency , computable general equilibrium , economics , data envelopment analysis , electricity , productivity , total factor productivity , mains electricity , macroeconomics , econometrics , production (economics) , stochastic frontier analysis , potential output , microeconomics , engineering , mathematical optimization , mathematics , voltage , electrical engineering , monetary policy
This article examines the impact of the elimination of x‐inefficiency in the Australian electricity supply industry using a computable general equilibrium (CGE) model of the Australian economy. Data envelopment analysis and a stochastic production frontier model are applied to measure x‐inefficiency in the electricity industry. The potential increase in total factor productivity resulting from microeconomic reform is introduced into the CGE model as a factor‐augmenting technological change. The model is used to measure the macroeconomic effects of microeconomic reform of the electricity industry. The Monash model is also used to replicate the results of earlier studies by the Industry Commission (1995) and Quiggin (1997) and thereby to provide a basis for comparing the three sets of results. The results of the current study imply that the impact of microeconomic reform on economic growth could well be significant if only a small proportion of the benefits were to be reflected in terms of an increase in aggregate employment.