No. 3 - Department of Treasury - The Western Australian Government

2006 No.3 Western Australian Economic SummaryIssues For Major ProjectAssistance Analysis UsingComputable GeneralEquilibrium ModelsBy Bruce LaymanDepartment of Treasury and FinanceTable of ContentsIntroduction.................................................................................... 76Computable General Equilibrium or Cost-Benefit Analysis? ......... 77Modelling Issues............................................................................ 78Justify a Market Failure.................................................................................78Justify the Assumptions Used......................................................................78Present a Measure of Economic Welfare...................................................79Include the Total Cost of Any Subsidy........................................................81Include the Impact of the Commonwealth Grants Commission..............83Account for Foreign Ownership ...................................................................85Labour Market and Interstate Migration Assumptions..............................86Make Sure Intermediate Input Responses are Truly Marginal................87Account for Risk .............................................................................................87Conclusion..................................................................................... 88References.................................................................................... 89Department of Treasury and Finance 75