Recent Developments in Forecasting With the Orani Model

Abstract

Since late in 1985 we have been developing the ORANI computable general equilibrium model of the Australian economy (Dixon, Parmenter, Sutton and Vincent, DPSV, 1982) as a vehicle for malting medium-run forecasts. We interpret ORANI as a set of relationships between annual growth rates of the variables and we add some simple dynamic equations for variables whose future values depend essentially on initial conditions. Examples are investment and the ratio of the net foreign debt to the GDP. (See Dixon, Parmenter and Horridge, 1986.) Then, outside the model, we compile a detailed scenario about likely developments over the forecast period in variables which are to be exogenous in the forecasting simulations. Typically these include world prices, world interest rates, rates of protection against imports, demographic variables, labour force and technology. Finally, we use the augmented version of ORANI t o project the annual growth rates of the model's endogenous variables over the medium term (say 6 years), conditional upon the scenario for the exogenous variables.

The TERM Model and Its Database

“…To meet this need, even early versions of ORANI (see Dixon et al 1978) included a "topdown" regional module to work out the regional consequences of national economic changes: national results for quantity (but not price) variables were broken down by region using techniques 2…”

Long Run Simulations With GTAP: Illustrative Results from APEC Trade Liberalisation

“…The non-risk-adjusted method introduced above is based on the long-run closure developed by Dixon, Parmenter and Rimmer (1981) and Horridge and Powell (1984) for the model (ORANT), where the percentage change in capital stocks is endogenised and the percentage change in the current rate of return exogenously equated to zero. Dixon, Parmenter, Sutton and Vincent (1982) describe the rate of return as the "natural replacement" to capital stocks as an exogenous variable.…”

“…This extension consists of some minor additions to and modifications of GTAP's structural form and the development of a new closure. This long-run closure for the GTAP model is based on the long-run closure developed by Dixon, Parmenter and Rimmer (1981) and Horridge and Powell (1984) for the ORANI model. In common with closures developed by Francois et al (1996), this long-run closure retains the comparative static nature of the GTAP model.…”