The Effects of Fiscal Restraint on the Australian Economy as Projected by the Murphy and MSG2 Models: A Comparison

Bruce Parsell, Alan Powell and Peter Wilcoxen

No 295057, Impact Project Archive from Impact Research Centre, University of Melbourne

Abstract: In the aftermath of the rational expectations debate and the onslaught of the New Classical economics, some builders of macroeconometric models have begun to change some of their habits, arguably for the better. In particular, neoclassical discipline is increasingly respected in the formation of the steady states or balanced growth solutions of the latest versions of several models (e.g., Australia's Murphy Model, and the McKibbin-Sachs Global [MSG21 Model). As well, the behaviour of certain variables (especially exchange rates and investment) increasingly tends to be linked to intertemporal optimization. In this paper we report on simulations made with the Murphy and MSG2 models of the effects of an unanticipated cut in government spending lasting for five years. We explain the results largely in terms of the innovative features mentioned above.

Keywords: Institutional and Behavioral Economics; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 67
Date: 1989-07
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Related works:
Journal Article: The Effects of Fiscal Restraint on the Australian Economy as Projected by the Murphy and MSG2 Models: A Comparison (1991)
Working Paper: THE EFFECTS OF FISCAL RESTRAINTS ON THE AUSTRALIAN ECONOMY AS PROJECTED BY THE MURPHY AND MSG2 MODELS: A COMPARISON (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ircipa:295057

DOI: 10.22004/ag.econ.295057

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