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Policy Analysis with the MSG2 Model

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  • Warwick J McKibbin

    (Reserve Bank of Australia)

Abstract

This paper uses a dynamic intertemporal macroeconomic model of the world economy to examine the macroeconomic consequences for a small economy, such as Australia, of shocks in the world economy. The model, called the MSG2 (McKibbin-Sachs Global) model, is based on the assumption that agents maximise objective functions subject to intertemporal budget constraints. Allowance is also made for the existence of various rigidities in labour markets and imperfections in the ability of agents to borrow and lend. The model is parameterized based on techniques from computable general equilibrium models and standard macroeconomic models. It is used to examine the impact on Australia of fiscal and monetary policies in the U.S. and Japan as well as the transmission of policy changes within the Australian economy.

Suggested Citation

  • Warwick J McKibbin, 1987. "Policy Analysis with the MSG2 Model," RBA Research Discussion Papers rdp8712, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp8712
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    File URL: https://www.rba.gov.au/publications/rdp/1987/8712.html
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    Cited by:

    1. Y. Qiang, 1999. "CGE Modelling and Australian Economics," Economics Discussion / Working Papers 99-04, The University of Western Australia, Department of Economics.
    2. Tony Hall & Jan Jacobs & Adrian Pagan, "undated". "Macro-Econometric System Modelling @75," NCER Working Paper Series 95, National Centre for Econometric Research.
    3. Rae, David, 1996. "NBNZ-DEMONZ: A dynamic equilibrium model of New Zealand," Economic Modelling, Elsevier, vol. 13(1), pages 91-165, January.
    4. Martin Fukac & Adrian Pagan, 2009. "Structural Macro-Econometric Modelling in a Policy Environment," NCER Working Paper Series 50, National Centre for Econometric Research.
    5. repec:bla:ecorec:v:67:y:1991:i:196:p:1-13 is not listed on IDEAS
    6. K.F. Wallis, 1992. "On Macroeconomic Policy and Macroeconomic Modeling," Economics Discussion / Working Papers 92-04, The University of Western Australia, Department of Economics.
    7. WARWICK J. McKIBBIN & ERIC S. SIEGLOFF, 1988. "A Note on Aggregate Investment in Australia," The Economic Record, The Economic Society of Australia, vol. 64(3), pages 209-215, September.

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