One of the recurring themes in the literature on financial systems is whether financial integration – that is, openness in the domestic and international financial system – has real, structural economic effects. This paper examines the effect of financial openness on the consumption of...

This paper develops an empirically constant, data-coherent, error correction model for inflation in Australia. The level of consumer prices is a mark-up over domestic and import costs, with adjustments for dynamics and relative aggregate demand. We address issues of cointegration, general to...

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...

This paper addresses the integration of <em>domestic</em> financial markets in Western Pacific economies – an unexamined issue in the literature of international financial integration – by exploring the relationship between money market interest rates and deposit and loan interest rates. Rules for...

The output gap, defined as actual less potential output, is an important variable in its own right and as an indicator of incipient changes in inflation. This paper reviews five methods of estimating it for Australian GDP data, including linear time trends, Hodrick-Prescott (HP) filter trends,...