George Verikios

Effects on the U.S. of an H1N1 Epidemic: Analysis with a Quarterly CGE model

We simulate the effects of a hypothetical H1N1 epidemic in the U.S. using a quarterly CGE model. Quarterly periodicity allows us to capture the short-run nature of an epidemic. We find potentially severe economic effects in the peak quarter. Averaged over the epidemic year, the effects are considerably damped. Our results indicate that the macroeconomic consequences of an epidemic are more sensitive to demand-side effects, such as reductions in international tourism and leisure activities, than to supply-side effects, such as reductions in productivity. This suggests that demand stimulus policies might be an appropriate economic response to a serious epidemic.

Global Gains from Liberalising Trade in Telecommunications and Financial Services

This paper uses a general equilibrium model to assess the effects of liberalising trade in telecommunications and financial services for 19 regions of the world. Results suggest that economies gain from removing barriers to the establishment of new operations (domestic or foreign), and by liberalising the operations of existing operators. For the world as a whole, the one-off gains are estimated to be at least 0.2 per cent of combined GNP, or about US

H1N1 influenza and the Australian macroeconomy

50 billion.

The distributional effects of the Hilmer reforms on the Australian gas industry

Early 2009 saw the emergence of an H1N1 influenza epidemic in North America that eventually spread to become the first pandemic of the twenty-first century. Previous work has suggested that pandemics and near-pandemics can have large macroeconomic effects on highly affected regions; here, we estimate what those effects might be for Australia. Our analysis applies the MONASH-Health model: a computable general equilibrium model of the Australian economy. We deviate from previous work by incorporating two important short-run mechanisms in our analytical framework: quarterly periodicity and excess capacity. The analysis supports the assertion that an H1N1 epidemic could have significant short-run macroeconomic effects but the size of these effects is highly dependent on the degree of inertia in the markets for physical capital and labour.

Keeping Cool: Use of Air Conditioning by Australians with Multiple Sclerosis

We analyse changes in the Australian gas industry during 1990s that were motivated by the Hilmer Reforms. We estimate the effects on real household income of the changes by combining a computable general equilibrium model with a microsimulation model. Although the structural changes were significant in their effects on the gas industry, they are estimated to have had minor effects on real household income in all Australian regions owing to the small size of the gas industry and household gas consumption at that time, and low importance of gas as an input to other industries. The changes are estimated to have slightly increased income inequality owing to the redistribution of income from labour to other primary factors.

The Costs of Keeping Cool for Australians with Multiple Sclerosis

Despite the known difficulties many people with MS have with high ambient temperatures, there are no reported studies of air conditioning use and MS. This study systematically examined air conditioner use by Australians with MS. A short survey was sent to all participants in the Australian MS Longitudinal Study cohort with a response rate of 76% (n = 2,385). Questions included hours of air-conditioner use, areas cooled, type and age of equipment, and the personal effects of overheating. Air conditioners were used by 81.9% of respondents, with an additional 9.6% who could not afford an air conditioner. Regional and seasonal variation in air conditioning use was reported, with a national annual mean of 1,557 hours running time. 90.7% reported negative effects from overheating including increased fatigue, an increase in other MS symptoms, reduced household and social activities, and reduced work capacity. Households that include people with MS spend between 4 and 12 times more on keeping cool than average Australian households.

The Long-run Effects of Structural Change and the Treatment of International Capital Accumulation, Mobility and Ownership

Heat intolerance is a significant medical problem affecting people with Multiple Sclerosis. For people with MS, the costs of running their air conditioners are an additional disease-related expense that must be met on top of other out-of-pocket disease-related expenses. Using the results of the 2008 Keeping Cool Survey, we estimate the relative economic disadvantage faced by MS households in trying to keeping cool. We find that MS households spend around ten times more on keeping cool than the average Australian household. Sensitivity analysis indicates that our results are robust with respect to all key parameters, across regions and nationally. Our results suggest that energy rebates for heat intolerant persons currently in place in Victoria and Western Australia should be implemented in other Australian states and territories.

Introducing Dynamics to TERM

Abstract Taking a commonly-used and commonly-available trade policy model as our starting point, we examine the long-run effects of large-scale structural change with and without international capital accumulation, mobility and ownership. We demonstrate the relative merits and limitations of different treatments of international capital accumulation, mobility and ownership. In doing so, we present a treatment of international capital accumulation, mobility and ownership that gives policy analysts an approach to analysing the effects of large-scale structural policies that is not too heavy in its theoretical and data demands. Our findings support the work of Baldwin and others who have demonstrated that ignoring capital accumulation, mobility and ownership underestimates net output and welfare effects of large-scale structural change.

An Emissions Trading Scheme for Australia: National and Regional Impacts

The massive master database of TERM needs to be aggregated before it can be used for any simulation. There is demand for moving to dynamic TERM simulations and rewards from doing so due to additional insights that arise from the influence that a dynamic baseline may have on a policy simulation. This chapter covers a number of issues concerning dynamic modeling with TERM. We start by outlining the motivations for moving from comparative static to dynamic regional modeling. Following that, we provide an overview of how we go about making a version of TERM dynamic. This includes details of how to vary the time intervals within a dynamic model. Next is an explanation of using the master database of TERM to prepare variable aggregation versions of dynamic TERM. The chapter also outlines how recursive dynamic models are run. RunDynam (specialist software) is a very useful tool for the dynamic CGE practitioner.