RDP 8712: Policy Analysis with the MSG2 Model 4. Conclusion

The results above are preliminary and are mainly presented to illustrate the usefulness of the approach taken in the MSG project for analysing the Australian economy as part of a global system. The introduction of forward-looking agents provides additional channels of transmission of policy change within the Australian economy and from overseas. Future work will more carefully calibrate the Australian module to the institutional features of the Australian economy. Given this framework, we intend to use techniques of dynamic game theory, as developed and applied in McKibbin and Sachs (1986), to assess the implications for Australia of policy coordination between the major countries of the world economy.