A Comparison of Four Macroeconometric Models of the Australian Economy

For more than a decade, macroeconometric models have been used in Australia as tools in policy analysis and as aids in the task of forecasting major economic variables. Until recently, however, not much work had been done in comparing these models. Challen and Hagger (1979a, 1979b) provide a useful introduction to existing Australian models which includes a summary of simulation studies previously undertaken with these models. In the current paper, the economic content of four of these models is summarized in a simple theoretical framework. Simulation analysis is also used to examine the dynamic adjustment mechanisms associated with the theoretical structure of each model. A general conclusion of this paper is that more work is needed on model evaluation in Australia, based on a wider range of criteria than have been used in the past.