The impact of the 2002–2003 drought on Australia

TERM (The Enormous Regional Model) is a “bottom-up” CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disaggregated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regi...

Full description

Saved in:
Bibliographic Details
Published in:Journal of policy modeling 2005-04, Vol.27 (3), p.285-308
Main Authors: Horridge, Mark, Madden, John, Wittwer, Glyn
Format: Article
Language:English
Subjects:
Agriculture
CGE modelling
Drought
Economic impact
Economic models
Regional economics
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:TERM (The Enormous Regional Model) is a “bottom-up” CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disaggregated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regional impacts of shocks that may be region-specific. We include some details of how we prepared the TERM database, using a national input–output table, together with regional data showing output (for agriculture) and employment (in other sectors) for each of 144 sectors and 57 regions (the Australian statistical divisions). Using a 38-sector, 45-region aggregation of the model, we simulate the short-run effects of the Australian drought of 2002–2003, which was the most widespread for 20 years. The effects on some statistical divisions are extreme, with income losses of up to 20%. Despite the relatively small share of agriculture in Australian GDP, the drought reduces GDP by 1.6%, and contributes to a decline in unemployment and to a worsening of the balance of trade.
ISSN:0161-8938
1873-8060
DOI:10.1016/j.jpolmod.2005.01.008