The effect of political and bureaucratic regime changes on Australia's real interest rate

Ankita Mishra, Imad A. Moosa, George B. Tawadros and Vinod Mishra

International Review of Economics & Finance, 2023, vol. 85, issue C, 124-136

Abstract: We attempt to find out if changes in political and bureaucratic regimes lead to significant mean shifts in the Australian short-term real interest rate, using quarterly data for the period 1970:3 to 2019:1. Utilising a sophisticated structural break test, three distinct structural breaks are found in Australia's real interest rate. The empirical results show that a model estimated to consider the shifts in the political regime explains more of the variation in the real interest rate compared to a model that incorporates shifts in the bureaucratic regime. Results from several non-nested model selection tests also confirm this finding.

Keywords: Political regimes; Bureaucratic regimes; Real interest rate; Australia (search for similar items in EconPapers)
JEL-codes: C52 E43 E58 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:85:y:2023:i:c:p:124-136

DOI: 10.1016/j.iref.2023.01.016

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