This paper reviews some evidence on the cost of equity capital in Australia and overseas. Two conventional approaches yield conflicting results. A third approach, based on the International Asset Pricing Model, starts from the premise that Australian equities are part of a world market, and...

This paper examines the macroeconomic experience of Australia from 1961/62 to 1988/89 focusing on the links between the fiscal deficit, private savings, private investment, the balance of payments and relative prices. Alternative theoretical hypotheses are considered in an attempt to explain the...

This paper develops a simulation model of the Australian housing market which incorporates many of the important features of housing. The use of an intertemporal framework allows us to examine the relationship between house prices, land prices, rental return on housing and investment in housing....

Investment plays an important role in influencing short-term aggregate demand and in determining the long-run growth potential of the economy. Despite the current debate concerning the potential problem of low investment, there have been few recent empirical studies of aggregate investment in...

This paper examines the role played in divergent macroeconomic policies in the major industrial economies in causing the large swings in asset prices and global trade imbalances experienced during the 1980s. Using the MSG2 model of the world economy, it is found that the observed and expected...

Since the breakdown of the Bretton-Woods system in the early 1970’s, the debate about coordinating the macroeconomic policies of the major countries in the world economy has intensified. There is a perception that the current “non-system” has lead to macroeconomic policies in major...

Expectations play an important role in the recent literature on the theory of macroeconomic policy. Rather than approaching the problem of macroeconomic policy formulation from the point of view of a policymaker mechanically controlling an economy, the recent literature has focussed on the...

The assumption of forward-looking agents in theoretical macroeconomic models has become increasingly popular in recent years. Despite this, the implementation of forward-looking expectations in large econometric models has been slower to emerge. The purpose of this paper is to survey, in a...

Automated teller machine (ATM) networks are a key component of payments systems. A number of competing theoretical models have been developed to examine fees associated with ATM transactions. A common feature of these models is that they imply that the elimination of interchange fees will cause...

Historical experience shows that disruptions in credit markets can have a material impact on activity and inflation. However, it is hard to measure such effects owing to the difficulty in isolating credit supply shocks. This paper employs survey data to identify the impact of credit supply...