Australian Economic Review

- Publisher:
- Wiley
- Publication date:
- 2021-02-01
- ISBN:
- 0004-9018
Issue Number
- Nbr. 51-1, March 2018
- Nbr. 50-4, December 2017
- Nbr. 50-3, July 2017
- Nbr. 50-2, June 2017
- Nbr. 50-1, March 2017
- Nbr. 49-4, December 2016
- Nbr. 49-3, September 2016
- Nbr. 49-1, March 2016
- Nbr. 49-2, February 2016
- Nbr. 48-4, December 2015
- Nbr. 48-3, September 2015
- Nbr. 48-2, June 2015
- Nbr. 48-1, March 2015
- Nbr. 47-4, December 2014
- Nbr. 47-3, September 2014
- Nbr. 47-2, June 2014
- Nbr. 47-1, March 2014
- Nbr. 46-4, December 2013
- Nbr. 46-3, September 2013
- Nbr. 46-2, June 2013
Latest documents
- Measuring Uncertainty and Its Impact on a Small Open Economy
We study the effect of uncertainty in New Zealand, a small open economy, by considering global and New Zealand‐specific uncertainty proxies, including several US‐ and global‐centric measures and two novel New Zealand‐specific uncertainty proxies constructed using surveys of New Zealand firms and professional forecasters. We study the effect of uncertainty on a set of New Zealand macroeconomic variables. While all of the uncertainty proxies contain valuable information to understand macroeconomic fluctuations in New Zealand, a simple SVAR analysis suggests that global uncertainty is more important than domestic uncertainty in driving the New Zealand business cycle. The implications of uncertainty for monetary policy largely depend on how heightened uncertainty interacts with monetary policy objectives.
- Choosing the Social Discount Rate for Australia
This article argues that in cost–benefit analysis government should adopt the opportunity cost of capital as represented by the alternative project rate of return as the social discount rate rather than the private or social time discount rate or a weighted cost of funds rate that reflects estimated proportions of investment and consumption foregone. The appropriate metric for the alternative project rate of return is average market return allowing for non‐diversifiable risk but not for diversifiable project risk. The article concludes that the appropriate social discount rate for Australia, for all sectors and states and territories, is approximately 6.5 per cent.
- Towards Understanding Macrofinancial Impacts of Loan‐to‐Value Ratio Policy in New Zealand: A General Equilibrium Perspective
We use a dynamic stochastic general equilibrium model as a framework for thinking about the transmission mechanism of loan‐to‐value macroprudential policy. We analyse the key channels through which the caps on loan‐to‐value ratios work to limit the speed of asset and credit cycles. We further analyse the mechanisms through which the caps support financial system resilience during asset price downturns that are of sufficient magnitude to cause financial and macroeconomic instability.
- Issue Information
- Macroeconomic Policies in a Low Interest Rate Environment: Back to Keynes?
This article discusses macroeconomic policies in a low interest rate environment, the central theme of the 2017 edition of the Melbourne Institute Macroeconomic Policy Meeting. After reviewing possible causes of the decline in interest rates observed since the 1990s, we present and discuss some of the challenges that monetary and fiscal policy face in a ‘new normal’ environment characterised by a real natural interest rate close to zero. Proposals by leading researchers on how to operate in such an environment are presented and discussed. We conclude by outlining some research questions that are highly relevant from a policy perspective.
- Public Sector Discount Rates: A Comparison of Alternative Approaches
This article describes alternative approaches to the public sector discount rate and explains the assumptions involved. Time‐varying rates are also considered. The social opportunity cost of capital (SOC) is the rate of return that could be earned on the ‘next best alternative’. The social rate of time preference (SRTP) is the rate of return required in order to divert resources to a public investment. Only in an ‘ideal’ market are these two rates brought into alignment in equilibrium. Essentially the discount rate reflects how the government values the future when making decisions on behalf of society: value judgements are unavoidable.
- The Australian Economy in 2017–2018: The Importance of Stronger Non‐Mining Business Investment Growth
- Income Inequality in New Zealand, 1935–2014
Trends in income inequality are increasingly being discussed by economists and policy makers. In New Zealand, income inequality indices increased during the late 1980s and early 1990s, with limited change thereafter. But little is known about the levels and changes of such indices over prior decades. Based on previously unexplored data from Statistics New Zealand Official Yearbooks and Inland Revenue, this article reports estimates for the Gini index of income inequality for New Zealand from the mid‐1930s to the present. Comparisons with estimates for Australia for 1942–2001 reveal some remarkable commonalities.
- Grattan Institute's Case for Sugar Tax Is Not Proven
Duckett, Swerissen and Wiltshire () advocated a 40‐cent tax per 100g of sugar in sugar‐sweetened beverages (SSB), because the tax would reduce the cost burden on the non‐obese. Duckett, Swerissen and Wiltshire took these ‘third‐party’ costs as indices of market failure. However, their distributional analysis is not an appropriate framework for the assessment of economic efficiency. Moreover, they did not quantify the causal mechanisms through which a small weight loss would appreciably lower health costs and increase employment of the obese. There may be an economic case for such a tax, but Duckett, Swerissen and Wiltshire have not made it.
- Firm‐Level Analysis Using the ABS’ Business Longitudinal Analysis Data Environment (BLADE)
The Australian Bureau of Statistics’ (ABS) Business Longitudinal Analysis Data Environment (BLADE) is the most comprehensive firm‐level statistical asset in Australia. This short overview provides readers a window into what data sources are used, how they are integrated, current and future applications and how these can contribute to evidence‐based policy making in Australia. At present, direct access is limited to staff directly employed by the Australian Statistician or through secondment.
Featured documents
- Choosing the Social Discount Rate for Australia
This article argues that in cost–benefit analysis government should adopt the opportunity cost of capital as represented by the alternative project rate of return as the social discount rate rather than the private or social time discount rate or a weighted cost of funds rate that reflects...
- A New Institutional Approach to Innovation Policy
Modern research and innovation policy is largely based on neoclassical welfare economics, in which the diagnosis of market failure in the production of new information is translated into a case for innovation policy. Both New Institutional and Public Choice economics criticise this approach because ...
- Profitability of Interest‐Free versus Interest‐Based Banks in Turkey
The present article compares Islamic banks with interest‐based banks to measure their profitability. It also investigates what Islamic funding and investments are used by Islamic banks. Our results from this Turkish sample showed that interest‐free banks did have positive and reasonably strong...
- Embracing the China of Tomorrow
- Towards Understanding Macrofinancial Impacts of Loan‐to‐Value Ratio Policy in New Zealand: A General Equilibrium Perspective
We use a dynamic stochastic general equilibrium model as a framework for thinking about the transmission mechanism of loan‐to‐value macroprudential policy. We analyse the key channels through which the caps on loan‐to‐value ratios work to limit the speed of asset and credit cycles. We further...
- A Survey of the Privatisation of Government‐Owned Enterprises in Australia since the 1980s
In this article, a survey is provided of the privatisation of government‐owned enterprises in Australia since the 1980s. In particular, the article evaluates the evidence that has been compiled on the success or failure of privatisation in enhancing efficiency in various industry sectors. In terms...
- The Consequences of Retail Electricity Price Rises: Rethinking Customer Hardship
The Australian energy sector is nearing the end of an investment megacycle, which has driven above‐trend electricity tariff increases. In this article, we combine energy market and demographic data and find that the dominant thought on customer hardship, aged pensioners, pales into insignificance...
- Service Oligopolies and Australia's Economy‐Wide Performance*
Australia's services industries now contribute almost four‐fifths of gross domestic product. The microeconomic reforms of the 1990s left behind numerous regulated private service oligopolies that contribute one‐quarter. Using an economy‐wide modelling approach that represents service oligopoly...
- Evaluating the Public Impact of Open Innovation
- Educational Achievement and the Allocation of School Resources
The debate on school resources and educational outcomes has focused almost exclusively on spending levels. We extend this by analysing the relationship between student achievement and schools' budget allocations using panel data. Per‐pupil expenditure has no apparent link to improvement in students'...