 A simple, structural, and empirical model of the antipodean transmission mechanismNew Zealand Economic Papers, 2006, vol. 40, issue 2, 91-126 Abstract: This paper studies the transmission of business cycles and the sources of economic fluctuations in Australia and New Zealand by estimating a Bayesian DSGE model. The theoretical model is that of two open economies that are tightly integrated by trade in goods and assets. They can be thought of as economically large relative to each other, but small with respect to the rest of the world. The two economies are hit by a variety of country-specific and world-wide shocks. The main findings are that the pre-eminent driving forces of antipodean business cycles are worldwide technology shocks and foreign, i.e. rest-of-the-world, expenditure shocks. Domestic technology shocks as well as monetary policy shocks appear to play only a minor role. Transmission of policy shocks is asymmetric, and neither central bank is found to respond to exchange rate movements. The model can explain 15% of the observed exchange rate volatility. Date: 2006 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:40:y:2006:i:2:p:91-126 Ordering information: This journal article can be ordered from DOI: 10.1080/00779954.2006.9558557 Access Statistics for this article New Zealand Economic Papers is currently edited by Dennis Wesselbaum More articles in New Zealand Economic Papers from Taylor & Francis Journals |
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