http://www.bis.org/cbhub/list/country/country_australia/index.rss Latest research hub papers from Australia en http://www.rba.gov.au/publications/rdp/2012/pdf/rdp2012-01.pdf Reserve Bank of Australia Research Discussion Papers by Hugo Gerard Co-movement in Inflation Hugo Gerard Back to Top 2011 2012-04-04T06:19:59Z Inflation rates across countries tend to exhibit a degree of co-movement. In this paper we use a panel vector autoregression (panel VAR) model to investigate possible explanations of this co-movement for the G7 economies. Shocks to commodity prices are found to be more important than common movements in real activity as a driver of 'global inflation' dynamics. However, commodity prices and common real activity cannot explain all of the co-movement in inflation. Even when controlling for these factors, a common indicator of inflation still offers explanatory power for domestic inflation in the panel VAR. Given the role of global inflation in explaining inflation in the G7 countries, we then consider the significance of global inflation for Australian inflation. We find that movements in international inflation offer useful information when included in models of Australian inflation, particularly headline inflation. Co-movement in Inflation Hugo Gerard Back to Top 2011 2012-04-04T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2012/2012-01.html Full text http://www.rba.gov.au/publications/rdp/2012/pdf/rdp2012-01.pdf Hugo Gerard Hugo Gerard 2012-03 Reserve Bank of Australia Research Discussion Papers C33 E31 E32 F44 http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-07.pdf Reserve Bank of Australia Research Discussion Papers by Jonathan Kearns and Philip Lowe Australia's Prosperous 2000s: Housing and the Mining Boom Jonathan Kearns and Philip Lowe 2012-01-06T06:19:59Z The 2000s was a particularly eventful decade for both the international and Australian economies. There were: two recessions in many countries; the largest international financial crisis since the Great Depression; the ongoing rapid development of Asia; asset booms and busts; and, Australia experienced the longest sustained increase in commodity prices and the terms of trade in the nation's history. This paper provides an overview of the Australian economy's performance in the decade. Several key topics are elaborated on, including the development of Asia and implications for Australia, policy frameworks, and the opportunities and challenges facing the Australian economy, with a particular focus on the expansion of household balance sheets and the rapid growth in the mining economy. Australia's Prosperous 2000s: Housing and the Mining Boom Jonathan Kearns and Philip Lowe 2012-01-06T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-07.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-07.pdf Jonathan Kearns Philip Lowe Jonathan Kearns and Philip Lowe 2011-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-08.pdf Reserve Bank of Australia Research Discussion Papers by Ellis Connolly and David Orsmond The Mining Industry: From Bust to Boom Ellis Connolly and David Orsmond 2012-01-06T06:19:59Z The Australian mining industry experienced a remarkable turnaround during the 2000s. The rapid growth of emerging economies in Asia drove a surge in demand for commodities, particularly those used in steel and energy generation. With global supply unable to respond quickly, prices surged to historically high levels. In response, mining investment in Australia rose to record levels as a share of the economy by the end of the decade. The rise in commodity prices has boosted activity and incomes and encouraged the factors of production to shift towards the mining industry. The boom has also been associated with a large increase in the real exchange rate, affecting trade-exposed industries. Overall, Australia's macroeconomic performance during the decade was much more stable than during the earlier mining booms, reflecting a stronger institutional framework. The Mining Industry: From Bust to Boom Ellis Connolly and David Orsmond 2012-01-06T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-08.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-08.pdf Ellis Connolly David Orsmond Ellis Connolly and David Orsmond 2011-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-06.pdf Reserve Bank of Australia Research Discussion Papers by James Hansen Does Equity Mispricing Influence Household and Firm Decisions? 2011-12-23T12:35:00Z Qualitative literature on equity price bubbles has often emphasised the effects of mispriced equity on economic decisions. This paper investigates this issue quantitatively using two ideas. The first is that equity mispricing is transitory, and has no long-run effects on economic outcomes. The second is that there exist observables that are correlated with mispricing, but uncorrelated with changes in fundamentals. Estimates of mispricing appear to accord well with periods described as bubble episodes for the US. The effects of these shocks on household decisions are found to be statistically significant. Does Equity Mispricing Influence Household and Firm Decisions? 2011-12-23T12:35:00Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-06.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-06.pdf James Hansen James Hansen 2011-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-04.pdf Reserve Bank of Australia Research Discussion Papers by Adrian Pagan and Tim Robinson Assessing Some Models of the Impact of Financial Stress upon Business Cycles Adrian Pagan and Tim Robinson 2011-12-21T12:37:00Z In the wake of the global financial crisis a considerable amount of research has focused on integrating financial factors into macroeconomic models. Two common approaches for doing so include the financial accelerator and collateralised lending, examples of which are Gilchrist, Ortiz and Zakrajšek (2009) and Iacoviello (2005). This paper proposes that two useful ways to evaluate such models are by focusing on their implications for business cycle characteristics and whether the models can match several stylised facts about the impact of financial conditions. One of these facts is that credit crises produce long-duration recessions. We find that while in the Gilchrist et al (2009) model financial factors can impact on particular cycles, they do little change to the average cycle characteristics. Some, but not all, of the stylised facts are captured by the model. Assessing Some Models of the Impact of Financial Stress upon Business Cycles Adrian Pagan and Tim Robinson 2011-12-21T12:37:00Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-04.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-04.pdf Adrian Pagan Tim Robinson Adrian Pagan and Tim Robinson 2011-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-05.pdf Reserve Bank of Australia Research Discussion Papers by Jarkko Jääskelä and Penelope Smith Terms of Trade Shocks: What are They and What Do They Do? Jarkko Jääskelä and Penelope Smith 2011-12-21T12:37:00Z This paper describes and quantifies the macroeconomic effects of different types of terms of trade shocks and their propagation in the Australian economy. Three types of shocks are identified based on their impact on commodity prices, global manufactured prices, and global economic activity. The first two shocks, a world demand shock and a commodity-market specific shock are fairly standard. The third shock, a globalisation shock that may result, for instance, from the increasing importance of China, India and eastern Europe in the global economy is more novel. The globalisation shock is associated with a decline in manufactured prices, a rise in commodity prices, and an increase in global economic activity. Terms of Trade Shocks: What are They and What Do They Do? Jarkko Jääskelä and Penelope Smith 2011-12-21T12:37:00Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-05.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-05.pdf Jarkko Jääskelä Penelope Smith Jarkko Jääskelä and Penelope Smith 2011-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-03.pdf Reserve Bank of Australia Research Discussion Papers by Mariano Kulish, Anthony Richards and Christian Gillitzer Urban Structure and Housing Prices: Some Evidence from Australian Cities Mariano Kulish, Anthony Richards and Christian Gillitzer 2011-10-05T06:21:00Z This paper studies determinants of some aspects of the structure of cities, including density and the price of land and housing. We use a version of the Alonso-Muth-Mills model, calibrated to broadly match some of the features of a representative large city. While the calibrated model omits many real-world features, it can nonetheless be used to explore the impact of factors such as: (i) the provision of transport infrastructure; (ii) zoning policies that limit housing density; (iii) frictions on the production of housing; and (iv) population size. The empirical section of the paper shows that the model is consistent with some empirical regularities for large Australian cities. The results of the paper draw attention to structural factors that may have contributed to developments in the Australian housing market in recent years. Urban Structure and Housing Prices: Some Evidence from Australian Cities Mariano Kulish, Anthony Richards and Christian Gillitzer 2011-10-05T06:21:00Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-03.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-03.pdf Christian Gillitzer Mariano Kulish Anthony Richards Mariano Kulish, Anthony Richards and Christian Gillitzer 2011-09 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-02.pdf Reserve Bank of Australia Research Discussion Papers by Callum Jones and Mariano Kulish Long-term Interest Rates, Risk Premia and Unconventional Monetary Policy Callum Jones and Mariano Kulish 2011-04-12T06:27:59Z In a model where the risk premium on long-term debt is, in part, endogenously determined, we study two kinds of unconventional monetary policy: long-term nominal interest rates as operating instruments of monetary policy and announcements about the future path of the short-term rate. We find that both policies are consistent with unique equilibria, that long-term interest rate rules can perform better than conventional Taylor rules, and that, at the zero lower bound, announcements about the future path of the short-term rate can lower long-term interest rates through their impact on both expectations and the risk premium. With simulations, we show that long-term interest rate rules generate sensible dynamics both when in operation and when expected to be applied. Long-term Interest Rates, Risk Premia and Unconventional Monetary Policy Callum Jones and Mariano Kulish 2011-04-12T06:27:59Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-02.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-02.pdf Mariano Kulish Callum Jones Callum Jones and Mariano Kulish 2011-04 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-01.pdf Reserve Bank of Australia Research Discussion Papers by Richard Finlay and Sebastian Wende Estimating Inflation Expectations with a Limited Number of Inflation-indexed BondsRichard Finlay and Sebastian Wende 2011-03-14T06:19:59Z We estimate inflation expectations and inflation risk premia using inflation forecasts from Consensus Economics and Australian inflation-indexed bond price data. Inflation-indexed bond prices are assumed to be non-linear functions of latent factors, which we model via an affine term structure model. We solve the model using a non-linear Kalman filter. While our results should not be interpreted too precisely due to data limitations and model complexity, they nonetheless suggest that long-term inflation expectations are well anchored within the 2 to 3 per cent inflation target range, while short-run inflation expectations are more volatile and more closely follow contemporaneous inflation. Further, while long-term inflation expectations are generally stable, inflation risk premia are much more volatile. This highlights the potential benefits of our measures over break-even measures of inflation which include both components. Estimating Inflation Expectations with a Limited Number of Inflation-indexed BondsRichard Finlay and Sebastian Wende 2011-03-14T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2011/2011-01.html Full text http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-01.pdf Richard Finlay Sebastian Wende Richard Finlay and Sebastian Wende 2011-03 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-08.pdf Reserve Bank of Australia Research Discussion Papers by Ivan Roberts and Anthony Rush Sources of Chinese Demand for Resource Commodities 2010-11-12T06:19:59Z Is China's demand for resources driven predominantly by domestic factors or by global demand for its exports? The answer to this question is important for many resource-exporting countries, such as Australia, Brazil, Canada and India. This paper provides evidence that China's (mainly manufacturing) exports have been a significant driver of its demand for resource commodities over recent decades. First, it employs input-output tables to demonstrate that, historically, manufacturing has been at least as important as construction as a driver of China's demand for resource-intensive metal products. Second, it shows that global trade in non-oil resource commodities can be described by the gravity model of trade. Using this model it is found that, controlling for domestic expenditure (including investment), exports are a sizeable and significant determinant of a country's resource imports, and that this has been true for China as well as for other countries. Sources of Chinese Demand for Resource Commodities 2010-11-12T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-08.html Full text http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-08.pdf Ivan Roberts Anthony Rush Ivan Roberts and Anthony Rush 2010-11 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-07.pdf Reserve Bank of Australia Research Discussion Papers by Jarkko Jääskelä and David Jennings Monetary Policy and the Exchange Rate: Evaluation of VAR Models 2010-10-28T12:37:00Z This paper examines the ability of vector autoregressive (VAR) models to properly identify the transmission of monetary policy in a controlled experiment. Simulating data from an estimated small open economy DSGE model for Australia, we find that sign-restricted VAR models do reasonably well at estimating the responses of macroeconomic variables to monetary policy shocks. This is in contrast to models that use recursive zero-type restrictions, for which inflation can rise following an unexpected interest rate increase while the exchange rate can appreciate or depreciate depending on the ordering of the variables. However, central tendency measures of sign-restricted VAR models can be misleading and hardly ever coincide with the true impulses. This finding casts doubt on the common notion that the median impulses are the ‘most probable’ description of the true data generating process. Finally, the paper presents some results from a sign-restricted VAR model estimated using Australian data. Monetary Policy and the Exchange Rate: Evaluation of VAR Models 2010-10-28T12:37:00Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-07.html Full text http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-07.pdf David Jennings Jarkko Jääskelä Jarkko Jääskelä and David Jennings 2010-09 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-06.pdf Reserve Bank of Australia Research Discussion Papers by Paul Bloxham, Christopher Kent and Michael Robson Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study 2010-10-28T12:37:00Z The long-running debate about the role of monetary policy in responding to rising asset prices has received renewed attention in the wake of the global financial crisis.This paper contributes to this debate by describing the Australian experience of a cycle in house prices and credit from 2002 to 2004, and discussing the role played by various policies during this episode. In particular, it focuses on the efforts by the Reserve Bank of Australia to draw attention to the risks associated with large, ongoing increases in housing prices and household borrowing. Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study 2010-10-28T12:37:00Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-06.html Full text http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-06.pdf Christopher Kent Paul Bloxham Michael Robson Paul Bloxham, Christopher Kent and Michael Robson 2010-09 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-05.pdf Reserve Bank of Australia Research Discussion Papers by Stephen Elias and Mariano Kulish Direct Effects of Money on Aggregate Demand: Another Look at the Evidence 2010-10-28T12:37:00Z Now that a number of central banks are faced with short-term nominal interest rates close to or at the zero lower bound, there is a renewed interest in the long-running debate about whether or not changes in the stock of money have direct effects. In particular, do changes in money have additional effects on aggregate demand outside of those induced by changes in short-term nominal interest rates? This paper revisits and reinterprets the empirical evidence based on single equation regressions which is quite mixed, with some results supporting and other results denying the existence of direct effects. We use a structural model with no direct effects of money to show that the finding of positive and statistically significant coefficients on real money growth can be misleading. The model generates data that, when used to estimate analogs of the empirical regressions, produce positive and statistically significant coefficients on real money growth, similar to those often found when using actual data. The problem is that single equation regressions leave out a set of variables, which in turn, gives rise to an omitted variables bias in the estimated coefficients on real money growth. Hence, they are an unreliable guide to calibrate monetary policies, in general, including at the zero lower bound. Direct Effects of Money on Aggregate Demand: Another Look at the Evidence 2010-10-28T12:37:00Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-05.html Full text http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-05.pdf Stephen Elias Mariano Kulish Stephen Elias and Mariano Kulish 2010-08 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-04.pdf Reserve Bank of Australia Research Discussion Papers by Jeremy Lawson, Crystal Ossolinski Employment Composition: A Study of Australian Employment Growth, 2002–2006 2010-07-07T06:19:59Z This paper uses data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to examine whether there was a change in employment rates for people with ‘low employment’ characteristics between 2002 and 2006, which was a period of strong employment growth. In particular, it estimates the relationships between employment and personal and household characteristics using a binomial logit model, with a comparison of the coefficients in 2002 and 2006 providing tentative evidence of a broadening of employment over this period. Employment Composition: A Study of Australian Employment Growth, 2002–2006 2010-07-07T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-04.html Full text http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-04.pdf Crystal Ossolinski Jeremy Lawson Jeremy Lawson, Crystal Ossolinski 2010-06 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-03.pdf Reserve Bank of Australia Research Discussion Papers by David Norman, Anthony Richards Modelling Inflation in Australia 2010-07-07T06:19:59Z This paper estimates a range of single-equation models of inflation for Australia. We find that traditional models, such as the expectations-augmented standard Phillips curve or mark-up models, outperform the more micro-founded New-Keynesian Phillips curve (NKPC) in explaining trimmed mean inflation, both in terms of in-sample fit and significance of coefficients. This in large part reflects the weak instruments problem in the estimation of the NKPC, and is partly corrected by including a direct measure of inflation expectations, but we still find that the unemployment rate or growth in marginal costs (unit labour cost and import prices) provides a better fit than either the output gap or level of real marginal costs. These traditional models also perform well in out-of-sample tests, relative to alternative models and some common benchmarks, with the standard Phillips curve clearly superior to these benchmarks on this test. As inflation has become better anchored and hence less variable, the magnitude of the errors of the single-equation models has declined, although the explanatory power (in terms of R-squared) has fallen together with this greater stability. We also investigate the empirical importance of some other variables that are commonly cited as determinants of inflation, and find little evidence that either commodity prices or the growth rate of money directly influence Australian underlying inflation. Modelling Inflation in Australia 2010-07-07T06:19:59Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-03.html Full text http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-03.pdf Anthony Richards David Norman David Norman, Anthony Richards 2010-06 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-02.pdf Reserve Bank of Australia Research Discussion Papers by Jarkko Jääskelä, Rebecca McKibbin Learning in an Estimated Small Open Economy Model 2010-03-31T06:21:00Z Expectations of the future play a key role in the transmission of monetary policy. Over recent years, a lot of theoretical and applied macroeconomic research has been based on the assumption of rational expectations. However, estimated models based on this assumption typically fail to capture the dynamics of the economy unless mechanical sources of persistence, such as habit formation in consumption and/or indexation to past prices, are imposed. This paper develops and estimates a small open economy model for Australia assuming two different types of expectations: rational expectations and learning. Learning – where expectations are formed by extrapolating from the historical data – can be an alternative means to generate the persistence observed in the data. Learning in an Estimated Small Open Economy Model 2010-03-31T06:21:00Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-02.html Full text http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-02.pdf Rebecca McKibbin Jarkko Jääskelä Jarkko Jääskelä, Rebecca McKibbin 2010-03 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-01.pdf Reserve Bank of Australia Research Discussion Papers by Adam Cagliarini, Tim Robinson, Allen Tran Reconciling Microeconomic and Macroeconomic Estimates of Price Stickiness 2010-03-30T17:34:59Z This paper attempts to reconcile the high estimates of price stickiness from macroeconomic estimates of a New-Keynesian Phillips Curve (NKPC) with the lower values obtained from surveys of firms' pricing behaviour. This microeconomic evidence also suggests that the frequency with which firms adjust their prices varies across sectors. The paper shows that in the presence of this heterogeneity, estimates of aggregate price stickiness from microeconomic and macroeconomic data should differ. Heterogeneity in firms' pricing decisions, as well as a more realistic production structure, is introduced into an otherwise standard New-Keynesian model. Using a model calibrated with microeconomic pricing survey data for Australia, the paper shows that estimates of the NKPC considerably overstate the true degree of price stickiness and may falsely suggest that some prices are indexed to past inflation. These problems arise because of a type of misspecification and a lack of suitable instruments. Reconciling Microeconomic and Macroeconomic Estimates of Price Stickiness 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-01.html Full text http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-01.pdf Allen Tran Adam Cagliarini Tim Robinson Adam Cagliarini, Tim Robinson, Allen Tran 2010-03 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-10.pdf Reserve Bank of Australia Research Discussion Papers by Adam Cagliarini, Warwick McKibbin Global Relative Price Shocks: The Role of Macroeconomic Policies 2010-03-30T17:34:59Z We use the multi-sector and multi-country G-Cubed model to explore the potential role of three major shocks – to productivity, risk premia and US monetary policy – to explain the large movements in relative prices between 2002 and 2008. We find that productivity shocks were major drivers of relative price movements, while shocks to risk premia and US monetary policy contributed temporarily to some of the relative price dispersions we observe in the data. The effect of US monetary policy shocks on relative prices was most pronounced in countries that fix their currency to the US dollar. Those countries that float were largely shielded from these effects. We conclude that the shocks we consider cannot fully capture the magnitude of the relative price movements over this period, suggesting that other driving forces could also be responsible, including those outside of the model. Global Relative Price Shocks: The Role of Macroeconomic Policies 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2009/2009-10.html Full text http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-10.pdf Adam Cagliarini Warwick McKibbin Adam Cagliarini, Warwick McKibbin 2009-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-09.pdf Reserve Bank of Australia Research Discussion Papers by Chris Becker, Clare Noone Volatility in International Capital Movements 2010-03-30T17:34:59Z Conventional wisdom is that some capital flows are inherently more volatile than others. However, our investigation of the statistical properties of these flows shows that no regular relationships exist to suggest that the particular composition of capital flows can help to explain the overall stability of the external accounts. Instead, capital seems to come and go in different forms with few reliable patterns. Volatility in International Capital Movements 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2009/2009-09.html Full text http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-09.pdf Clare Noone Chris Becker Chris Becker, Clare Noone 2009-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-08.pdf Reserve Bank of Australia Research Discussion Papers by Michael B Devereux, James Yetman Leverage Constraints and the International Transmission of Shocks 2010-03-30T17:34:59Z Recent macroeconomic experience has drawn attention to the importance of interdependence among countries through financial markets and institutions, independently of traditional trade linkages. This paper develops a model of the international transmission of shocks due to interdependent portfolio holdings among leverage-constrained financial institutions. In the absence of leverage constraints, international portfolio diversification has no implications for macroeconomic co-movements. When leverage constraints bind, however, the presence of diversified portfolios in combination with these constraints introduces a powerful financial transmission channel which results in a high correlation among macroeconomic aggregates during business cycle downturns, quite independent of the size of international trade linkages. Leverage Constraints and the International Transmission of Shocks 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2009/2009-08.html Full text http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-08.pdf James Yetman Michael B. Devereux Michael B Devereux, James Yetman 2009-12 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-02.pdf Reserve Bank of Australia Research Discussion Papers by George Gardner, Andrew Stone Competition Between Payment Systems 2010-03-30T17:34:59Z This paper is the first of two companion pieces examining competition between payment systems. Here we develop a model of competing platforms which generalises that considered by Chakravorti and Roson (2006). In particular, our model allows for fully endogenous multi-homing on both the merchant and consumer sides of the market. We develop geometric frameworks for understanding the aggregate decisions of consumers to hold, and merchants to accept, different payment instruments, and how these decisions will be influenced by the pricing choices of the platforms. We also illustrate a new potential source of non-uniqueness in the aggregate behaviour of consumers and merchants which is distinct from the well-known 'chicken and egg' phenomenon – and indeed can only arise in the context of multiple competing platforms. Finally, we briefly discuss how this new source of non-uniqueness may nevertheless shed light on the 'chicken and egg' debate in relation to the development of new payment systems. Competition Between Payment Systems 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2009/2009-02.html Full text http://www.rba.gov.au/publications/rdp/2009/publications/rdp/2009/pdf/rdp2009-02.pdf George Gardner Andrew Stone George Gardner, Andrew Stone 2009-04 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/rdp/rdp2009-07.pdf Reserve Bank of Australia Research Discussion Papers by Laura Berger-Thomson, Elaine Chung; Rebecca McKibbin Estimating Marginal Propensities to Consume in Australia Using Micro Data 2009-12-02T17:38:00Z Estimating Marginal Propensities to Consume in Australia Using Micro Data 2009-12-02T17:38:00Z Abstract http://www.rba.gov.au/PublicationsAndResearch/RDP/rdp2009-07.html Full text http://www.rba.gov.au/rdp/rdp2009-07.pdf Elaine Chung Laura Berger-Thomson Rebecca McKibbin Laura Berger-Thomson, Elaine Chung; Rebecca McKibbin 2009-11 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/rdp/rdp2009-06.pdf Reserve Bank of Australia Research Discussion Papers by Jamie Hall and Jarkko Jääskelä Inflation Volatility and Forecast Accuracy 2009-11-09T07:10:59Z Inflation Volatility and Forecast Accuracy 2009-11-09T07:10:59Z Abstract http://www.rba.gov.au/PublicationsAndResearch/RDP/RDP2009-06.html Full text http://www.rba.gov.au/rdp/rdp2009-06.pdf Jarkko Jääskelä Jamie Hall Jamie Hall and Jarkko Jääskelä 2009-10 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/rdp/rdp2009-05.pdf Reserve Bank of Australia Research Discussion Papers by Dan Andrews and Daniel Rees Macroeconomic Volatility and Terms of Trade Shocks 2009-10-16T07:10:00Z Macroeconomic Volatility and Terms of Trade Shocks 2009-10-16T07:10:00Z Abstract http://www.rba.gov.au/PublicationsAndResearch/RDP/RDP2009-05.html Full text http://www.rba.gov.au/rdp/rdp2009-05.pdf Dan Andrews Daniel Rees Dan Andrews and Daniel Rees 2009-10 Reserve Bank of Australia Research Discussion Papers http://www.rba.gov.au/rdp/RDP2009-04.pdf Reserve Bank of Australia Research Discussion Papers by John Simon, Kylie Smith and Tim West Price Incentives and Consumer Payment Behaviour 2009-07-01T07:10:59Z Price Incentives and Consumer Payment Behaviour 2009-07-01T07:10:59Z Abstract http://www.rba.gov.au/PublicationsAndResearch/RDP/RDP2009-04.html Full text http://www.rba.gov.au/rdp/RDP2009-04.pdf Tim West John Simon Kylie Smith John Simon, Kylie Smith and Tim West 2009-06 Reserve Bank of Australia Research Discussion Papers