Trade Theory, Analytical Models and Development

Trade Theory, Analytical Models and Development

Essays in Honour of Peter Lloyd, Volume I

Edited by Sisira Jayasuriya

Trade Theory, Analytical Models and Development, comprises 11 essays offering new contributions on the following topics: trade and wages; factor endowments, factor mobility and political economy of trade; optimality of tariffs; measurement of welfare; customs union theory; endogenous mergers and tariffs; intra-industry trade; state trading enterprises and trade liberalisation; general equilibrium effects of e-Commerce, and trade; economic growth with production and consumption externalities; and environmental pollution and resource degradation.

Chapter 10: Explaining a dynamic CGE simulation with a trade-focused back-of-the-envelope analysis: the effects of eCommerce on Australia

Peter B. Dixon and Maureen T. Rimmer

Subjects: economics and finance, international economics


10. Explaining a dynamic CGE simulation with a trade-focused back-of-the-envelope analysis: the effects of eCommerce on Australia Peter B. Dixon and Maureen T. Rimmer* 1. INTRODUCTION This chapter was written in honour of Peter Lloyd for presentation on the occasion of his retirement. Together with Arndt, Corden, Gregory, Hazari, Kemp, Salter, Snape, Swan and Woodland, Lloyd is in a select group of economists that have made Australia a leading contributor over the last half century to the development and application of the theory of international trade.1 Reflecting the pre-eminence of its trade theorists, Australia’s applied multi-sectoral modellers have also emphasized trade issues. The first multisectoral model for Australia was the path-breaking work of Evans (1972). The Evans model was devoted almost entirely to the analysis of the effects of changes in tariffs. Similarly, protection was the primary focus of Klijn’s (1974) model and of the ORANI model (Dixon et al., 1977 and 1982). While the MONASH model (Dixon and Rimmer, 2002) has a broader range of applications than its predecessors, it retains a strong trade focus. As measured by the share of trade in its GDP, Australia is not among the world’s most trade-oriented nations. This makes the dominance of trade analysis in the work of Australia’s theoretical and applied economists somewhat of a surprise. Nevertheless, the concentration on trade has been well justified. Over many decades Lloyd and Australia’s other leading trade economists, supported by multi-sectoral modellers, have demonstrated the importance to Australia’s economic...

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