Transmission of External Shocks in the RBII Model

Malcolm Edey, Elaine Kerrison and Gordon Menzies
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Malcolm Edey: Reserve Bank of Australia
Elaine Kerrison: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: The paper gives an overview of recent work in the development of the RBII macroeconomic model, focussing on adjustments designed to reflect the post-deregulation financial environment. Changes to the RBII model have been made in two main areas. First, a clearing market for short-term funds has been introduced, making interest rates much more responsive to open market operations. Secondly, a number of adjustments have been made so as to model debt accumulation (both domestic and external) in more detail. The properties of the revised model are illustrated in simulations of a variety of domestic and external shocks. These simulations also serve to illustrate the implications of alternative assumptions about the short term operating objectives of monetary policy.

Date: 1987-11
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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp8710

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