This paper concerns the role of wage indexation as a mechanism for enabling an economy to achieve outcomes that would not otherwise be time consistent. The desirability of indexation depends on the size of real and nominal shocks and on a policymaker's incentives for short-run inflation...

This paper quantifies the costs of mitigating exchange rate volatility within the context of a flexible inflation targeting central bank. Within a standard linear-quadratic formulation of inflation targeting, we append a term that penalises deviations in the exchange rate to the central bank's...

New growth theories emphasize the role played by innovation in promoting economic growth. Since it is difficult to quantify the amount of innovation undertaken in an economy, there is little available empirical evidence assessing the contribution made by innovation to growth, in contrast to...

We address the question of whether asymmetry in the business cycle and asymmetry in the persistence of negative versus positive shocks characterises Australian output growth. Using nonlinear time series models we provide some evidence consistent with the idea that Australian output growth is...