An Estimated New Keynesian Policy Model for Australia

Daniel Buncic () and Martin Melecky ()

The Economic Record, 2008, vol. 84, issue 264, pages 1-16

Abstract: 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. Copyright © 2008 The Economic Society of Australia.

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Related works:
Working Paper: An estimated New Keynesian policy model for Australia (2007)
Working Paper: An Estimated, New Keynesian Policy Model for Australia (2005)
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