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An Estimated New Keynesian Policy Model for Australia *
Author(s) -
BUNCIC DANIEL,
MELECKY MARTIN
Publication year - 2008
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/j.1475-4932.2008.00443.x
Subject(s) - economics , new keynesian economics , business cycle , inflation (cosmology) , exchange rate , monetary policy , supply shock , monetary economics , demand shock , output gap , macroeconomics , small open economy , keynesian economics , open economy , physics , theoretical physics
An open economy New Keynesian policy model for Australia is estimated in this study. We investigate how important external shocks are as a source of macroeconomic fluctuations when compared to domestic ones. The results of our analysis suggest that the Australian business cycle and domestic inflation are most affected by domestic demand and supply shocks, respectively. However, domestic output also appears to be strongly affected by foreign demand shocks and domestic inflation by exchange rate shocks. Domestic variables do not seem to be significantly affected by foreign supply and monetary policy shocks.