The Theoretical Structure of ORANI-INT

Abstract

Five types of agents are recognised in ORANI-INT: producers, consumers, investors, governments and foreigners. Producers are grouped into 13 industrial sectors. Each of these sectors produces a single commodity. For each domestic commodity there is assumed to be an imperfect foreign substitute. The 26 commodities are used by the domestic agents (i.e., producers, consumers, investors and governments). A representative foreign agent uses the 13 domestically produced commodities. As well as intermediate inputs, producers use three primary factors (agricultural land, labour and sector-specific capital) and inputs of ‘other cost’ tickets (which cover miscellaneous industry expenses). Capital is industry-specific and is created by the using industry. Investors can allocate their funds across 15 types of perfectly substitutable assets. These include shares in the 13 industries and foreign and domestic bonds. Zero pure profits are assumed in all activities with taxes on commodity flows putting wedges between basic prices (i.e., the price received by producers before commodity taxes) and purchasers’ prices (i.e., the tax inclusive prices).