Model economy
If you are an Australian who pays taxes, shops at a supermarket, drives a car or has a mortgage, your future is being shaped by an elite team of Monash University economists.
The team at the Centre of Policy Studies (CoPS) use a sophisticated model of the economy to help governments across the world fine tune new policy, and one of their latest findings is that proposed Federal climate change policies won't wreck the economy.
Developed by CoPS over 20 years, the key tool the economists use is one of the most sophisticated computer models of the Australian economy ever developed, simulating the interactions between different industries, households and governments -- even the dynamics between the Australian economy and the rest of the world.
The model is an achievement in its own right, but is only half of the CoPs equation.
CoPS Director Professor Philip Adams said it was his staff's skill in using the computer model to produce accurate predictions of the real-world impacts of economic and social policies that placed CoPs in demand with government leaders.
"It requires considerable experience, background knowledge and expertise to run the models sensibly and to understand the numbers that are coming from the models," said Professor Adams.
Most recently, Professor Adams and his team assessed the viability of different options around the Federal Government's proposed emissions trading scheme, a complex mechanism designed to reduce greenhouse gas emissions, due for introduction in 2010.
They found the scheme will not plunge Australia into an economic crisis.
"Our work related to the emissions trading scheme has involved determining the consequences for the whole Australian economy, individual states, various industries, and households of different incomes of the Australian Government going it alone with a national emissions scheme, or entering into a global scheme," Professor Adams said.
"The costs in terms of the size of the economy of meeting these quite significant carbon emission reduction targets are not going to be dramatic. It won't cause us to go into a period of rising unemployment or a rapid escalation of poverty.
Professor Adams
"For the economy generally, the response to climate change will certainly be higher energy prices and a greater focus on energy conservation, but we are already moving down that path. It's not something that will cause the economy to come to a shuddering halt."
Over the past 20 years CoPS has been called on to assess the impact of many other major policy changes, such as the Goods and Services Tax and the reduction in tariff protection for the clothing, footwear and textiles industries, so governments could make informed decisions about the economic impact a policy change would have on real people in real life.
CoPS also has similar models of the economies of many other countries, including the United States, China, South Africa, Brazil, Indonesia, and several European countries, and the centre has done extensive work for governments and organisations around the world.
"Our focus is always on forecasting, as accurately as possible, the impacts of major policies so they can be designed in a way that achieves their aims and makes the world a better place.
"Our focus has always been on real-world problems and on suggesting real-world solutions."
Visit the Centre of Policy Studies website.