An Econometric Analysis of the Australian Current Account Balance.

In this paper we apply the LSE econometric modeling methodology to the foreign sector of the Australian economy during the seventies and eighties. We show that our preferred model is free from statistical misspecification and variance dominates its nearest rival. In addition to this, the preferred model's predictions with respect to the balance on current account are superior to those of the rival specification. In that sense the model encompasses the previous research efforts dealing with the Australian foreign sector. The paper shows the LSE methodology to be both viable and practical, and that it is likely to continue being a dominant influence in applied econometrics. Copyright 1990 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia