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(2) endogenously, as a policy instrument which varies in order to accommodate an exogenously determined policy target such as a required outcome for the government’s budget deficit; or (3) exogenously. Foreign demand (international exports) MONASH is a single country model, and hence cannot explicitly model all of the determinants of foreign demand for Australian products. It handles export demand by imposing for each exported commodity a foreign demand schedule. These schedules, which relate the volume of exports to the foreign currency price of Australian products, are downward sloping. Hence, export volumes and foreign-currency prices can respond to changes in Australian supply conditions. Capital stocks, investment and rates of return MONASH allows for two broad treatments of capital and investment. The first, involving explicit assumptions about movements in rates of return and investment/capital ratios, is suitable for comparative-static simulations. In such simulations, we are concerned with the effects of a policy or other shock after considerable time, say seven years. In these circumstances, MONASH allows the user to assume that the shock under examination does not affect rates of return. Thus, industries favoured by the shock attract capital until their rates of return are driven down to their initial levels and that industries for which the shock is unfavourable lose capital until their rates of return increase to their initial levels. Having, in this way, tied down the long-run effect of the shock on capital stocks, the effect on investment by industry can then be determined by assuming no change in investment/capital ratios. The second broad treatment of capital and investment in MONASH involves explicit capital supply functions, and is used in year-to-year simulations, i.e., simulations tracing out the paths of variables for years t, t+1, t+2, etc. While the assumption of no change in rates of return may be suitable for long-run analysis, it is unrealistic to assume that movements in an industry’s rate of return are eliminated by year-to-year movements in the industry’s capital stock. In each year of year-to-year simulations, industries’ capital growth rates (and thus investment) are determined according to functions which specify that investors are willing to supply increased funds to industry j in response to increases in j’s expected rate of return. However, investors are assumed to be cautious. In any year, the capital supply functions in MONASH limit the growth in industry j’s capital stock so that disturbances in j’s rate of return are eliminated only gradually. Equations for facilitating dynamic policy simulations There are a number of mechanisms in MONASH introduced to facilitate dynamic policy simulations. Probably the most important mechanisms relate to wage and employment adjustment in the labour market. In comparative static analysis, one of the following two assumptions is made about the operations of the labour market: (1) real wages adjust so that any policy shock has no effect on employment; or (2) real wages are unaffected by the shock and employment adjusts. MONASH, however, allows an intermediate position for year-to-year policy simulations. In MONASH, real wages can be sticky in the short run but flexible in the long run and employment can be flexible in the shortrun but sticky in the long run. More specifically, for year-to-year policy 60
simulations it is assumed that the deviation in the real wage increases in proportion to the deviation in employment from its base case-forecast level. The coefficient of adjustment is chosen so that the employment effects of a shock are largely eliminated after eight to ten years. This labour market is consistent with macroeconomic modelling in which the non-accelerating inflation rate of unemployment (NAIRU) is exogenous. B.3 Evaluation of regional impacts The MONASH model adopts a ‘tops down’ approach to regional analysis. Under this approach, national results are generated for each industry. These results are then subdivided into State effects based on the industry mix of each state’s activity, and then further subdivided to give impacts at the statistical division level, again based on the industry mix of each statistical division’s activity. The model allows for the modification of regional results to reflect particular features of a region, with a consequent rebalancing of effects across all other regions, although this is often limited in practice due to information shortfalls. The MONASH model identifies 57 separate statistical divisions. These divisions are shown in the Table below with a link to the related ABS statistical division. The tops down methodology is well suited to showing the regional effects of national reforms, but less well suited to tracing the regional effects of reforms or policies that are region specific. Where significant policies differ between regions it would be better to use a region specific or ‘bottoms up’ modelling approach, such as the MONASH Multi-Regional Forecast (MMRF) model. 61
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© Commonwealth of Australia 2000 I
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Table of contents Foreword ........
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Part 2 - Case studies Section One I
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Executive summary E-commerce is sti
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Part 1— economic analysis
Page 13 and 14:
Chapter One Study context, aims and
Page 15 and 16:
Within the business-to-business cat
Page 17 and 18:
Table 1.4 Projected growth in econo
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Chapter Two Economic issues What di
Page 21 and 22: Exhibit 2.1 Disintermediation effec
Page 23 and 24: Table 2.1 E-commerce impact on vari
Page 25 and 26: Chapter Three Changes ahead—indus
Page 27 and 28: Health Significant efficiencies sta
Page 29 and 30: Chapter Four Economy-wide assessmen
Page 31 and 32: Direct changes and flow on impacts
Page 33 and 34: consumption relative to economic ac
Page 35 and 36: External competitiveness Greater us
Page 37 and 38: Industry outcomes Greater use of e-
Page 39 and 40: Food products The food products sec
Page 41 and 42: people with differing occupational
Page 43 and 44: Tasmania and the Northern Territory
Page 45 and 46: Table 4.2 Regional growth and emplo
Page 47: The data for country regions (Exhib
Page 50 and 51: impacts are a reasonable representa
Page 53 and 54: Chapter Six Policy implications and
Page 55 and 56: Appendix A Study methodology, shock
Page 57 and 58: confidence. This is at the expense
Page 59 and 60: All of the GDP gain generated by ch
Page 61 and 62: (s11) Saving of particular inputs I
Page 63 and 64: Table A.1 continued Commodity Per c
Page 65 and 66: Table A.2 continued Engine & Boiler
Page 67 and 68: Table A.2 continued Safety Inspecto
Page 69 and 70: Table A.3 continued Industries 2007
Page 71: B.2 The structure of MONASH The cor
Page 75 and 76: Table B.1 (Continued) MONASH-RR Reg
Page 77 and 78: C.2 Forecasts for macroeconomic var
Page 79 and 80: other grains, iron and non-iron ore
Page 81 and 82: The numbers in column (II) of Table
Page 83 and 84: Productivity growth over the histor
Page 85 and 86: forecast of a 0.1 per cent decline
Page 87 and 88: Productivity growth in the construc
Page 89 and 90: Employment prospects in the sector
Page 91 and 92: Table D.1 continued Textiles, cloth
Page 93 and 94: Table D.1 continued Health, educati
Page 95 and 96: Table D.2 continued 45 Bags and Con
Page 97: Part 2 — case studies
Page 100 and 101: Industry sectors’ use of e-commer
Page 102 and 103: e-commerce were chosen. Key questio
Page 104 and 105: Banking For some time now most of t
Page 106 and 107: 2.3 Cost savings Banks are keen to
Page 108 and 109: 2.5 Changing business modes Branch
Page 110 and 111: Banks are also looking to take adva
Page 112 and 113: NAB, as a multinational, is already
Page 114 and 115: activities such as consumer electro
Page 116 and 117: Box 3.2 Building a business on e-co
Page 118 and 119: One of the issues for all industrie
Page 120 and 121: 108
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Box 4.2 Australia Post and e-commer
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Opportunities are being created for
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Value can be transferred into Austr
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Continued use of email and the deve
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E-commerce allows some flexibility
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120
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are introduced to market at a start
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educe the duplication of assessment
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6.3 Cost savings as a result of ele
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The primary e-commerce tools for im
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New service modes and channels to t
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132
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This Section will review the implic
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of greater depth. (It should be not
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consumers watch five per cent less
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artist is the promotion which airpl
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New costs The fragmentation and reg
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gambled. The development of Interne
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146
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Making a purchase over the Internet
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Customers who access troubleshootin
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they does not actually sell those i
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Key points There are few other sect
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e-commerce allows quicker order pro
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9.3 New costs The demand for busine
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How a ticket is sold, through an ag
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Box 10.1 Case study: E-commerce and
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The education and training sector h
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166
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11.2 Production Manufacturing busin
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Opportunities for re-intermediation
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Value could transfer within the sec
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174
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years’ time. 30 This reflects an
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seeks to provide a point of referen
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To a small extent, direct selling t
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Box 13.1 Austmine—a window for th
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Box 13.2 Leaving mining sites for w
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