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VUMR Modelling Reference Case, 2009-10 to 2059-60

Staff working paper

This paper by Owen Gabbitas and Umme Salma was released on 28 November 2016. The paper describes a dynamic reference case that can be used in running the Victoria University Multi Region (VUMR) model, which is a state-based model of the Australian economy. The paper outlines the general assumptions adopted, the basis on which these assumptions are made and the model projections of their impact. The modelling reference case updates that used to support the Economy-wide Modelling of Impacts of COAG Reforms: Business Regulation and VET (PC 2012).

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The role of the reference case in assessing the economic impacts of policy is outlined in the Framework report for the 2012 study. It provides a simplified general counterfactual or indicative projection of the economy over time based on ‘business as usual’ policy settings and parameters against which the impacts of potential policies can be assessed. That is, the impact of a change will be measured as the difference between the modelling scenario and the reference case scenario. The reference case abstracts from short‑ to medium‑term variation in economic activity, as it makes the assumption that the variables will move smoothly towards their longer‑term projections from their values in the base year. The modelling reference case is therefore a simplified projection of the progression of the economy, and not a forecast of the size and composition of the economy into the future.

The reference case documented in this paper was developed to support a number of Commission inquiries, including Migrant Intake into Australia (2016), Workplace Relations Framework (2015) and Australia's Automotive Manufacturing Industry (2014).