Are the Effects of Monetary Policy Asymmetric in Australia?

Philip Bodman ()

No 406, MRG Discussion Paper Series from School of Economics, University of Queensland, Australia

Abstract: This paper examines whether monetary policy shocks have asymmetric effects on output in Australia. Using methods similar to Cover (1992) together with some other simple threshold models, evidence is found of certain types of asymmetries when comparing monetary contractions to monetary policy expansions. Unanticipated decreases in interest rates appear to significantly raise GDP growth rates, whilst unexpected increases in rates do not appear to significantly lower growth. These findings are also found in a brief examination of the investment and consumption channels within the monetary policy transmission process. Economic growth is also significantly higher in a low interest rate regime (when interest rates are below a certain threshold, such as the sample average or average over some longer time period) than in a high interest rate environment. These results appear to refute the idea that monetary policy is like `pushing on a string', at least for Australian data over the period 1973:1-2005:1.

New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
View list of references

Downloads: (external link)
http://www.uq.edu.au/economics/mrg/0406.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:qld:uqmrg6:04

Access Statistics for this paper

More papers in MRG Discussion Paper Series from School of Economics, University of Queensland, Australia
Contact information at EDIRC.
Series data maintained by Tobin Millen ().