Robert Waschik

Agricultural Land Retirement and Slippage: Lessons from an Australian Case Study

This paper uses a Computable General Equilibrium (CGE) model to examine the economic implications of agricultural land retirement from wool production for conservation in Australia. Employing an innovative specific-factors characterization of production to generate short-run and long-run results, we show that the potential welfare gains from land retirement can be significant. However, in several scenarios examined we find that slippage in agricultural production is significant, resulting in reduced welfare. Our slippage results provide insights into the relationship between the potential causes of slippage and describe how a land retirement policy can be designed to minimize this effect. (JEL C68, Q24)

How much abatement will Australia’s Emissions Reduction Fund buy?

The economic implications for Australia of replacing its carbon tax policy with an Emissions Reduction Fund (ERF) scheme are examined. A computable general equilibrium model is used to show that the budget allocated for the ERF is about 50 per cent of that required to meet Australias greenhouse gas abatement commitments.

Union bargaining power, relative wages, and efficiency in Canada

We use a computable general equilibrium model incorporating trade unions, efficient Nash contracts, existing distortions, and international trade to measure the deadweight loss in Canada arising from the ability of unions to raise wages above competitive levels. The model incorporates two features new to CGE analysis: parameterization of union bargaining power and variations in union preferences. Estimates indicate the deadweight loss to be no more than 0.04 per cent of GNP. However, the small aggregate effect masks considerable adjustments at the industry level, in imports and exports, and in the distribution of income. Adjustments are also larger with employment-oriented unions.

Policy Forum: Designing a Carbon Price Policy: Is the Australian Climate Plan Fair to Australia's Energy‐Intensive, Trade‐Exposed Industries?

The implications of Australias unilateral carbon‐pricing plan for its energy‐intensive, trade‐exposed industries are analysed. While a priori arguments for protecting such industries make good theoretical sense, empirically significant levels of support for such protection centre on the non‐ferrous metal industry alone.

Parametric and non-parametric analysis of tax changes

In this paper we examine the net effect of several major tax changes in Australia on residential property prices. Specifically, we consider the announcement and introduction effects that resulted from several policy changes including the introduction of the Goods and Services Tax (GST) and the accompanying First Home Owner Grant (FHOG). Using a large data set of residential property sales in Melbourne, Australia, between 1992 and 2002 we estimate various models using parametric and nonparametric methods. While our parametric models suggest that the tax policy changes appear to have a statistically significant impact on house prices, no economically significant impact is detected by our nonparametric models, nor (upon closer inspection) by the parametric models themselves. Given the enormity of the sample size, this provides a telling example of the fundamental difference between statistical and economic significance and its implications for detecting government policy effectiveness.

Impact of Protection on Domestic Processing of Primary Commodities for Export Markets: An Example from the Sri Lankan Tea Industry

Processing of primary commodities to export more ‘value added’ products has become a widely adopted development strategy to accelerate employment and export revenues in many developing countries following the experience of East Asian NICs. However, policies which are in place to protect domestic producers limit the effectiveness of such an approach by introducing distortions in factor and input markets. In this paper, we examine how protection for a group of primary product producers affects the performance of domestic value addition for export markets. We consider the case of the tea import regulation policy of Sri Lanka and its effects on the performance of exporting tea in a value added form. The analysis shows how protection of a producer group can prevent development of the value added tea export industry of Sri Lanka. The findings should be of interest to policy makers as well as development analysts.