TRANS-TASMAN CGE MODELING - SOME ILLUSTRATIVE RESULTS FROM THE JOANI MODEL

A two country multisectoral computable general equilibrium model for N ew Zealand and Australia is developed and applied to explore issues co ncerning the effects of the CER-induced tariff reductions and related topics. A comparison with a similar short-run exercise conducted in 19 88 records minimal gains from a 1990 starting position as data shows l ittle remaining protection to be removed. The removal of all protectio n arrangements with respect to imports from outside the CER region res ults in over 1% extra GDP in the short run. However this figure is dou bled in both countries in the longer run as further gains from the rea llocation of capital resources among the sectors within each country a re experienced In interpreting the model results the critical nature o f the assumptions incorporated within the model closure is discussed. Alternative assumptions addressing questions of intercountry capital m obility as well as exchange rate determination are examined.