FORECASTS FOR THE AUSTRALIAN ECONOMY USING THE MONASH MODEL

This paper describes annual forecasts for the period 1990-91 to 1996-9 7 made with a new CGE model of the Australian economy called MONASH. U sing MONASH, we project the implications for the structure of the econ omy of macroeconomic forecasts made by conventional, less formal metho ds. MONASH has enough dynamics to enable it to track, at the micro lev el, business-cycle phenomena which are assumed in the macro forecasts. The CGE model is very detailed, distinguishing 112 industries, 6 regi ons and up to 283 labour-force occupations. Apart from the level of de tail, the strength of our MONASH forecasting system is that it produce s forecasts which can be interpreted fully in terms of the model's the ory, data and the assumptions underlying the exogenous input.