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Inflation and Capacity Constraints in Australian Manufacturing Industry
Author(s) -
Shepherd David,
Driver Ciaran
Publication year - 2003
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.t01-1-00097
Subject(s) - inflation (cosmology) , manufacturing sector , economics , industrial organization , capital (architecture) , key (lock) , manufacturing , capacity utilization , perspective (graphical) , econometrics , macroeconomics , business , microeconomics , computer science , marketing , history , physics , computer security , archaeology , artificial intelligence , theoretical physics
In the present paper we estimate a model of price‐cost inflation for Australia using business survey responses of firms in the manufacturing sector. The data allow us to circumvent a number of key statistical problems, related in particular to the measurement of costs and structural changes in the model. Equally important, the data allow a new and more detailed perspective on the nature of supply constraints affecting inflation in the manufacturing sector. A new finding is that capital constraints have been more important in generating inflationary pressure than labour constraints or general indicators of capacity utilisation.