Modelling the impact of declining Australian terms of trade on the spatial distribution of income

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    Abstract

    Macroeconomic shocks such as movements in exchange rates or the terms of trade not only affect the overall economy but also affect different areas in a country in different ways, thus creating a spatial distribution of the shock. The effect on some regions is often larger than the national effect as regions differ in terms of resource endowments, economic activities, physical and human capital. The standard national CGE-Microsimulation framework is a useful approach to capture the distributional impacts of macro shocks on households at national and state and territory levels. However, the CGE-Microsimulation framework does not capture the distributional impact of a policy change or an external shock on small geographical areas of interest. To overcome this limitation, this paper extends the framework by linking a spatial microsimulation model to the national CGE -microsimulation framework in a top-down manner to capture the distribution of income in small areas of a macro shock. We simulate a potential decline in Australian terms of trade over 2012-13 to 2017-18 and find significant differences in the spatial distribution of the impacts of the shock.
    Original languageEnglish
    Pages (from-to)100-126
    Number of pages27
    JournalInternational Journal of Microsimulation
    Volume7
    Issue number1
    Publication statusPublished - 2014

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    Spatial Distribution
    Spatial distribution
    Microsimulation
    Macros
    Shock
    Term
    Modeling
    Economics
    Human Capital
    Exchange rate
    Macroeconomics
    Linking
    Trade
    Resources
    Framework

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    title = "Modelling the impact of declining Australian terms of trade on the spatial distribution of income",
    abstract = "Macroeconomic shocks such as movements in exchange rates or the terms of trade not only affect the overall economy but also affect different areas in a country in different ways, thus creating a spatial distribution of the shock. The effect on some regions is often larger than the national effect as regions differ in terms of resource endowments, economic activities, physical and human capital. The standard national CGE-Microsimulation framework is a useful approach to capture the distributional impacts of macro shocks on households at national and state and territory levels. However, the CGE-Microsimulation framework does not capture the distributional impact of a policy change or an external shock on small geographical areas of interest. To overcome this limitation, this paper extends the framework by linking a spatial microsimulation model to the national CGE -microsimulation framework in a top-down manner to capture the distribution of income in small areas of a macro shock. We simulate a potential decline in Australian terms of trade over 2012-13 to 2017-18 and find significant differences in the spatial distribution of the impacts of the shock.",
    keywords = "Terms of Trade, Computable General Equilibrium, Microsimulation, spatial income distribution.",
    author = "Yogi VIDYATTAMA and Maheshwar RAO and Itismita MOHANTY and Robert TANTON",
    year = "2014",
    language = "English",
    volume = "7",
    pages = "100--126",
    journal = "International Journal of Microsimulation",
    issn = "1747-5864",
    publisher = "International Microsimulation Association",
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    }

    TY - JOUR

    T1 - Modelling the impact of declining Australian terms of trade on the spatial distribution of income

    AU - VIDYATTAMA, Yogi

    AU - RAO, Maheshwar

    AU - MOHANTY, Itismita

    AU - TANTON, Robert

    PY - 2014

    Y1 - 2014

    N2 - Macroeconomic shocks such as movements in exchange rates or the terms of trade not only affect the overall economy but also affect different areas in a country in different ways, thus creating a spatial distribution of the shock. The effect on some regions is often larger than the national effect as regions differ in terms of resource endowments, economic activities, physical and human capital. The standard national CGE-Microsimulation framework is a useful approach to capture the distributional impacts of macro shocks on households at national and state and territory levels. However, the CGE-Microsimulation framework does not capture the distributional impact of a policy change or an external shock on small geographical areas of interest. To overcome this limitation, this paper extends the framework by linking a spatial microsimulation model to the national CGE -microsimulation framework in a top-down manner to capture the distribution of income in small areas of a macro shock. We simulate a potential decline in Australian terms of trade over 2012-13 to 2017-18 and find significant differences in the spatial distribution of the impacts of the shock.

    AB - Macroeconomic shocks such as movements in exchange rates or the terms of trade not only affect the overall economy but also affect different areas in a country in different ways, thus creating a spatial distribution of the shock. The effect on some regions is often larger than the national effect as regions differ in terms of resource endowments, economic activities, physical and human capital. The standard national CGE-Microsimulation framework is a useful approach to capture the distributional impacts of macro shocks on households at national and state and territory levels. However, the CGE-Microsimulation framework does not capture the distributional impact of a policy change or an external shock on small geographical areas of interest. To overcome this limitation, this paper extends the framework by linking a spatial microsimulation model to the national CGE -microsimulation framework in a top-down manner to capture the distribution of income in small areas of a macro shock. We simulate a potential decline in Australian terms of trade over 2012-13 to 2017-18 and find significant differences in the spatial distribution of the impacts of the shock.

    KW - Terms of Trade

    KW - Computable General Equilibrium

    KW - Microsimulation

    KW - spatial income distribution.

    M3 - Article

    VL - 7

    SP - 100

    EP - 126

    JO - International Journal of Microsimulation

    JF - International Journal of Microsimulation

    SN - 1747-5864

    IS - 1

    ER -