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THE RELATIVE SIGNIFICANCE OF A RANGE OF ECONOMIC POLICIES FOR IMPROVING AUSTRALIA'S BALANCE OF TRADE *
Author(s) -
Stoeckel Andrew B.,
Higgs Peter J.
Publication year - 1988
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1988.tb00676.x
Subject(s) - computable general equilibrium , economics , balance of trade , agriculture , debt , general equilibrium theory , relative price , terms of trade , balance (ability) , international economics , monetary economics , macroeconomics , medicine , ecology , physical medicine and rehabilitation , biology
Australia faces a very serious trade problem. A large improvement in the balance of trade is required simply to stop its international debt from rising above levels which are already considered too high. In this paper, a range of economic policies are examined. Each generates a $A1 billion improvement (in 1985‐86 prices) in the balance of trade after about 2 years. The following economic shocks are examined: an increase in world agricultural prices; a cut in real wages; a reduction in protection for manufacturing industries; a change in the tax mix in favour of indirect taxation; and a contraction in real domestic absorption. The impacts of these shocks are derived from simulations with ORANI, a computable general equilibrium model of the Australian economy. The effects of these shocks on the agricultural sector are studied in detail.