In Dog Days, Garnaut (2013) portrays Australia's immediate future as characterised by the end of the mining investment boom, declining terms of trade, a decline in labour input per head of population, slow multifactor productivity growth, fiscal consolidation and rising world interest rates. We quantify the consequences of these developments using a detailed general equilibrium model. Consistent with Garnaut, we find that wage and demand restraint will be required to steer Australia through the difficult period ahead. Public understanding of Dog Days will help move expectations to match current unfavourable conditions and thereby promote an orderly adjustment with minimum damage to employment and standards of living.

Policy instruments designed to increase environmental flows in the Murray-Darling Basin are compared using TERM-H 2 O, a detailed, dynamic regional CGE model. Voluntary and fully compensated buybacks are much less costly than infrastructure upgrades as a means of obtaining a target volume of environmental water, even during drought, when highly secure water created by infrastructure upgrades is more valuable. As an instrument of regional economic management, infrastructure upgrades are inferior to public spending on health, education and other services in the Basin. For each job created from upgrades, the money spent on services could create between three and four jobs in the Basin.

We simulate the economic impacts of the COVID‐19 pandemic on the Australian economy using VURM, a detailed computable general equilibrium model for Australia. We identify five sources of economic perturbations: changes to productivity due to changing work practices, changes in household demand imposed by voluntary and mandated social distancing behaviour, changes in international trade due to a weakened world economy and severe curtailment of international travel, reduced population growth due to lower net migration and large debt‐financed fiscal stimulus. Variants of these shocks and associated recovery paths are simulated in VURM, with three scenarios describing potential recovery arcs. The macroeconomic and industry impacts are reported for each scenario. Ultimately, our focus is on the impact on output and employment in the agriculture and mining sectors, and on their likely recovery prospects. At the peak of economic impacts, output in these sectors declines by about 6 per cent relative to a no‐COVID baseline. Compared to the economy‐wide average, the decline in agriculture and mining output is small. This can be explained by relatively minor impacts on work practices, relatively low negative impacts on demand for intensive agriculture (helped by fiscal supports for households) and relatively low disruption to export demand.

Should Australia be concerned about the consequences of a possible outbreak of protection between the US and China, two of Australia's largest trading partners? Using the Global Trade Analysis Project model, this paper describes the impact of a 45 per cent tariff imposed by the US on Chinese imports, as flagged by US president‐elect Donald Trump during the election campaign. Gross Domestic Product (GDP) is reduced in both the US and China, with no appreciable revival of US manufacturing. Terms‐of‐trade effects cause only minor macroeconomic impacts on Australia. In itself, a US‐China tariff would not cause significant global economic damage but could have important demonstration effects. Worldwide tariff hikes would take many economies into recession and reduce world trade volumes by a third.

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