An econometric model of the Japanese wool industry

This study builds a monthly econometric model of the Japanese Wool Textile Industry for the period from January 1968 to February 1975. In developing equations to explain responses in the four major production sectors of the industry, particular attention has been paid t o the influences of stocks and the general level of Japanese economic activity. Besides the traditional goodness of fit statistics for each equation, simulation experiments conducted with the final version of the model were used as a further tool for model evaluation, and where poor results were encountered attempts were made to isolate the cause, with particular emphasis placed on the stability of the coefficients in the defective equations. To further assess the impact of the two features mentioned above, appropriate policy experiments were also conducted. The major conclusion from the study is that stocks do play an important role in the formulation of the greasy wool purchases and output decisions; however, these effects stern from the interaction of greasy wool input with stocks in the former case and unintended stock changes in the latter; and not through the stock levels in isolation as implied by many comments on the industry. The level of economic activity was also shown to have a significant impact on the industry, with the policy experiments revealing that the largest response was to changes in monetary conditions. Finally, the study failed to discover price responses in all but the fabric sector, which implies that the concern of the operators in the industry to meet production and sales targets overrode price considerations in the sample period .

Author dc:creator

• Carland, David John

Language dc:language.iso

en

Dc Identifier Other

b1162097

OAI identifier oai:identifier

oai:openresearch-repository.anu.edu.au:1885/117348