Dixon, Peter and Rimmer, Maureen T (2004) Measuring contributions to the Australian economy: the benefits of a fast-growing motor vehicle and parts industry industry. Economic Papers, 23 (1). pp. 73-87. ISSN 0812-0439 (print) 1759-3441 (online)

Abstract

The contribution of an industry to the economy is often measured by an out-put calculation showing labour used directly in the industry and indirectly via the production of intermediate inputs for the industry. This paper demonstrates an alternative approach based on simulations with a dynamic computable general equilibrium model. Rather than measuring contribution in terms of resources used, we look at the potential contribution of an industry in terms of the effect on economic welfare of improved performance. We apply our methodology to the Australian motor vehicle industry by simulating the impact that this industry could make if it were to achieve higher productivity growth, higher export growth and the production of cars of greater appeal to Australian consumers.

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