The Sensitivity of ORANI Projections of the Short-run Effects of Increases in Protection to Variations in the Values Adopted for Export Demand Elasticities
ORANI is a multisectoral model of the Australian economy. (Fully documented in P. B. Dixon, B. R. Parmenter, J. Sutton and D. Vincent (1982), hereafter cited as DPSV (1982).) It has been applied in studies of the effects on industries, regions and occupational groups of changes in tariffs, in the exchange rate, in wages and in aggregate demand, as well as of the adoption of home-price schemes for exported products, the exploitation of mineral resources, the adoption of equal pay for women, changes in domestic oil pricing policies, changes in world commodity prices and changes in the provision of subsidies to ailing industries. In all these applications, a feature of the results has been the sensitivity of the export-oriented industries to increases in the costs of labour and other inputs. In ORANI simulations, it is normally assumed that exporters face elastic foreign-demand schedules for their products, so that they cannot pass on cost increases to foreign customers without suffering significant sales reductions.
KeywordsDemand Elasticity Export Price Export Volume International Linkage Foreign Demand
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