We fit a two-regime threshold autoregressive model to a trade weighted index of the Australian real exchange rate. We find strong evidence of a threshold in the real exchange rate, with the data being classified into two regimes. The timing of the first regime is consistent with events that...

The consumption of cigarette and tobacco products in Australia is modelled using the rational addiction theory of Becker and Murphy, augmented by data on advertising, regulatory intervention, and demographic factors. Over the past 35 years, price (including tobacco taxes), real income, and...

The menu costs model predicts that during times of rapid inflation firms are less likely to vary output in response to changes in nominal aggregate demand. This paper tests the proposition using a disaggregated sample of Australian three-digit ASIC manufacturing industries. The results show that...

D. Corbae and S. Ouliaris (1991) examined Australia's long-run real exchange rate and concluded that, because the data follow a random walk, purchasing power parity does not hold as a long-run equilibrium relation. The authors reexamine their data by calculating nonparametric measures of...

This paper tests a version of R. J. Barro's tax smoothing hypothesis using Australian data for the period 1964-65 to 1994-95. The model assumes intertemporal optimization by a government seeking to minimize the distortionary effects of tax collection. The model predicts that the budget surplus...

This paper looks at the interaction between public and private consumption in Australia. The results show that there is a long-run equilibrium relation between private and public consumption. However, the nature of this relation changed during the 1980s from one of complementarity to one of...

Large increases in the private sector's savings ratio, during a period of rapid growth in the relative size of the public sector, has led to the suggestion that substitution between private and public consumption may be an important feature of the Australian economy (Clements [1979]). In this...