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Modelling the Economic Impacts of Migration and Population Growth

Consultancy Report

This consultancy report by James Giesecke and G A Meagher of the Centre of Policy Studies, Monash University, was prepared for the final report of the commissioned study, Economic Impacts of Migration and Population Growth.

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1 Introduction

2 Determination of the exogenous projections

3 The MONASH simulations

4 Discussion of the LME results


1 Introduction ad Summary

2 The Model
2.1 Overview of MONASH
2.2 Generating the MONASH basecase
2.3 Amendments to MONASH for the present simulation
2.4 A back of the envelope representation of the MONASH model
2.5 Disaggregation in MONASH

3 Results
3.1 The policy shocks
3.2 Employment rises, generating positive deviations in investment and capital.
3.3 The cost of capital increases and labour-intensive sectors expand, causing the long-run L/K ratio to rise
3.4 Real GDP rises, but not by as much as real GNE
3.5 The balance of trade moves towards deficit, the terms of trade decline
3.6 With the labour / capital ratio higher, and the terms of trade lower, the real wage falls
3.7 Average real GNP per capita rises
3.8 In the short to medium run, incumbent wage losses and capital gains are approximately matched, but in the long run incumbent real income falls
3.9 Wage rates
3.10 Sectoral results

Appendix 1 CRETH labour supply

Appendix 2 Back-of-the-envelope relationship between labour supply by skill and occupational wage relativities