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Modelling Economy-wide Effects of Future Automotive Assistance

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  • Productivity Commission

Abstract

The Commission’s modelling indicates that there would be economy–wide benefits from further reductions in assistance to the automotive sector, particularly for tariffs. It also suggests that the benefits would be larger under the current assistance reduction program than options entailing lesser reductions. The model projected potential net benefits to the community of some $0.5 billion a year under this program, with gains to consumers and other industries outweighing negative impacts on the automotive industry. Modelling also confirms that a significant further appreciation of Australia’s currency, associated with the mining boom, would have a much greater impact on the automotive industry than scheduled tariff reductions. In the Commission’s assessment, these conclusions are not materially affected by consideration of factors, such as adjustment costs and scale economies, not captured directly by the model.

Suggested Citation

  • Productivity Commission, 2008. "Modelling Economy-wide Effects of Future Automotive Assistance," Research Reports, Productivity Commission, Government of Australia, number 30.
  • Handle: RePEc:ris:prodcs:30
    Note: 150 pages
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    File URL: http://www.pc.gov.au/__data/assets/pdf_file/0008/80765/automodelling.pdf
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    File URL: http://www.pc.gov.au/projects/study/automodelling/finalreport
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    References listed on IDEAS

    as
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    2. Dixon, Peter B, 1978. "Economies of Scale, Commodity Disaggregation and the Costs of Protection," Australian Economic Papers, Wiley Blackwell, vol. 17(30), pages 63-80, June.
    3. Kaludura Abayasiri-Silva & Mark Horridge, 1998. "Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy," Palgrave Macmillan Books, in: Kenneth J. Arrow & Yew-Kwang Ng & Xiaokai Yang (ed.), Increasing Returns and Economic Analysis, chapter 14, pages 307-334, Palgrave Macmillan.
    4. repec:bla:ecorec:v:53:y:1977:i:144:p:525-34 is not listed on IDEAS
    5. Richard H. Snape, 1977. "Trade Policy in the Presence of Economies of Scale and Product Variety," The Economic Record, The Economic Society of Australia, vol. 53(4), pages 525-534, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Peter B. Dixon, 2009. "Comments on the Productivity Commission’s Modelling of the Economy‐Wide Effects of Future Automotive Assistance," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 11-18, March.
    2. Dixon, Peter B. & Rimmer, Maureen T., 2013. "Validation in Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1271-1330, Elsevier.
    3. Lionel Bopage & Kishor Sharma, 2014. "Liberalization and Structural Change in Australian Automotive Industry: An Analysis of Trade and Productivity Performance: 1962–2008," Global Business Review, International Management Institute, vol. 15(3), pages 447-460, September.
    4. Anita King, 2012. "Economy-Wide Impacts of Industry Policy," Treasury Working Paper Series 12/05, New Zealand Treasury.
    5. Jonathan Pincus, 2009. "Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(2), pages 121-130, June.
    6. Jonathan Karnon & Brita Pekarsky, 2020. "Should Health Economic Evaluations Undertaken from a Societal Perspective Include Net Government Spending Multiplier Effects?," Applied Health Economics and Health Policy, Springer, vol. 18(4), pages 467-475, August.

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