Whether people form their expectations of the future in a model-consistent or extrapolative manner, has implications for the way the economy and monetary policy are modelled. The first half of this paper provides three pieces of information about inflation expectations – that survey measures...

In this paper, we investigate the spillover of the financial-market volatility arising from the East-asian crisis on financial markets in Australia and New Zealand. We do this by examining the impact of the major ‘news’ from Asia on the stock, bond and foreign exchange markets of the two...

This paper draws together themes from work at the RBA, other national central banks, the BIS and elsewhere on recent developments in housing and housing finance. The general conclusion is that financial and macroeconomic developments have increased the demand for the stock of housing. Because...

Housing investment is one of the most cyclical components of GDP. Much of that cyclicality stems from the sector’s sensitivity to interest rates, but it is also possible that construction lags generate intrinsic cyclicality in this sector. Although the housing sector is generally considered to...

Australia’s household sector appears to hold a greater proportion of its wealth in dwellings than do households in other countries. Average dwelling prices in Australia also appear to be high relative to household income, but dwellings in Australia are not noticeably higher in quality than...

A home is the single largest purchase that most households make, and it is one that usually requires some debt financing. Because housing debt is such a large component of households’ balance sheets, it is important to understand the financing decision. In this paper, we use household level...