ABSTRACT
This chapter evaluates various trade policy options for New Zealand forestry using computable general equilibrium model, to help us resolve some of the ambiguities in the results of the price-exogenous theoretical model. It utilizes the model to quantify the likely magnitude of the effects of policy intervention, something that a theoretical model cannot do. The chapter serves the role of providing the quantitative information necessary for a more informed debate over the likely impact of processing incentives in New Zealand. The changes in the incomes of mobile factors are relatively minor, due to the relatively small size of the forestry industry, and there is no possibility of them outweighing the effects of the tax on the price received. Gross output of forestry seems to be a little sensitive to its own internal elasticity in the short run, but insensitive to changes in the wood products technology.
