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How Reliable are ORANI Conclusions? *
Author(s) -
PAGAN A. R.,
SHAN J. H.
Publication year - 1987
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1987.tb00635.x
Subject(s) - sensitivity (control systems) , economics , econometrics , supply and demand , mathematics , mathematical economics , microeconomics , engineering , electronic engineering
This paper seeks to systematically review the main criticisms of the ORANI model by developing a graphical version of a two‐sector (exportables and nonexportables) miniature ORANI model. This model shows that ORANI results occur because while supply curves in both sectors have similar slopes. the slopes of the demand curves are polar opposites. Furthermore this model shows that results will tend to be more sensitive to variations in supply rather than demand parameters. Experiments using the ORANI model itself verified these findings. These results indicate that some form of sensitivity analysis with respect to assigned parameter values should form an integral part of any ORANI experiment .