Modelling the World Wool Market: A Hybrid Approach

George Verikios

No 07-18, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: We present a model of the world wool market that merges two modelling traditions: the partialequilibrium commodity-specific approach and the computable general-equilibrium approach. The model captures the multistage nature of the wool production system, and the heterogeneous nature of raw wool, processed wool and wool garments. It also captures the important wool producing and consuming regions of the world. We illustrate the utility of the model by estimating the effects of tariff barriers on wool products using partial- and general-equilibrium solutions. We find that either solution generates similar wool industry results, whereas the macroeconomic effects differ significantly with the partial-equilibrium estimates significantly overestimating the benefits of the tariff changes.

Keywords: general equilibrium; multistage production; partial equilibrium; tariffs; wool products. (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007
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Journal Article: Modelling the world wool market: A hybrid approach (2009)
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