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Final Report Economic And Budgetary Impacts of the Alice Springs Darwin Railway Project prepared for the Department of Transport and Works



Final Report Economic And Budgetary Impacts of the Alice Springs Darwin Railway Project prepared for the Department of Transport and Works

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Tabled paper 1267


Tabled Papers for 8th Assembly 1997 - 2001; Tabled Papers; ParliamentNT




Tabled by Barry Coulter


Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




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Access Economics 8.2. Modelling approach The AE-MACRO model required modification to cover the longer time horizon, and to include the Alice Springs - Darwin railway. The changes include: extending the time horizon of the model and of the exogenous variables (growth of population, productivity and some expenditure aggregates and policy parameters, as well as foreign interest rates, inflation rates etc.); modifying the equations for business investment and production, government outlays, and domestic and foreign financing to accommodate the project. In addition we included in the simulations a module that allows us to explore the impact of a shock at the level of an individual state - in this case the NT and SA. 8.2.1. Economic assumptions Beyond Access Economics normal ten-year forecasting horizon7, we assume that the Australian and international economies develop along steady long-run paths. Key long-run economic assumptions and/or results underlying our analyses are shown in Table 10. Table 10: Long-run economic assumptions Growth rates Percent per annum Australia Working age population 0.9 Labour productivity 1.6 Real GDP 3.1 Inflation 2.8 Gross Product - SA 2.5 Gross Product - NT 3.5 United States Inflation 2.5 10-vear bond vield fleveD 5.4 Australian Gross Domestic Product grows at an average rate of about 3 percent, underpinned by growth in the working age population, trend growth in labour productivity and the participation rate. The former slows as the baby boomer demographic retires, and the new population cohorts coming through reflect the lower birth and net migration rates of recent decades. Growth in the world economy is sufficient to maintain the demand for Australian exports. 7 Access Economics, AEM Forecast Report, Canberra, published quarterly. 38

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