Regional and Industry Cycles in Australasia: Implications for a Common Currency

Arthur Grimes

Macroeconomics from University Library of Munich, Germany

Abstract: If two countries experience similar cycles, loss in monetary sovereignty following currency union may not be severe. Analysis of cyclical similarity is frequently carried out at the overall industry level, then interpreted with reference to regional industrial structures. By contrast, this paper explicitly incorporates regional industry structure into an examination of Australasian cycles. Since 1991, NZ and Australasian cycles have been highly correlated, but there is little evidence that the NZ cycle has been 'caused' by Australian regional or industry cycles. We test whether the NZDAUD exchange rate has insulated NZ from Australian shocks, but find it has not played a major buffering role in response to Australian industry shocks (including mining shocks). Instead, the strongest impacts on the NZDAUD stem from the NZ cycle. An important loss of monetary sovereignty under currency union may therefore arise in response to NZ-specific shocks.

JEL-codes: E32 E52 F36 R11 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005-09-12
New Economics Papers: this item is included in nep-ifn and nep-mac
Note: Type of Document - pdf; pages: 42
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Regional and industry cycles in Australasia: Implications for a common currency (2005)
Working Paper: Regional and Industry Cycles in Australasia: Implications for a Common Currency (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0509020

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