Economic Papers最新文献

The central banking community is facing major challenges – economic, intellectual and institutional. A key economic challenge is the need to rebuild room for policy manoeuvre, which has fallen drastically over time. This lecture focuses on the intellectual challenge, that is, facts on the ground are increasingly testing the long-standing analytical paradigms on which central banks can rely to inform their policies. It argues that certain deeply held beliefs underpinning those paradigms can complicate the task of regaining policy headroom.

In the fight against the COVID-19 pandemic, New Zealand stood out with its ambitious elimination goal and the small death count per capita. The country’s strategy included full lockdown measures that were strict by international standards. In this paper we investigate whether New Zealand’s strict lockdowns brought significant changes to the dwelling price capitalisation of environmental amenities. Our results show a nuanced landscape. While before the pandemic, Auckland homebuyers were willing to pay a premium for dwellings located adjacent to open spaces, such premium either vanished or became a penalty during the lockdown phases. There was also a significant premium for dwellings within 300 m of beaches. But again such premium either decreases or becomes a penalty across the lockdown phases. In addition, we find a preference for dwellings located further away from Auckland CBD. Hence, some amenities that used to have a positive (or neutral) impact on the price of a property have now become disamenities from homebuyers’ perspective after the experience of the pandemic. This paper informs planners, policy-makers and private actors with a better understanding of the behaviour of Auckland’s housing market under the disruptions due to the pandemic and lockdowns.

This note aims at assessing the temporal relationship that exists between the time reference of dynamic models with infinite and finite horizon. Specifically, comparing the optimal inter-temporal plans arising from an infinite horizon model and a 2-period overlapping generations model in their stationary equilibria, I suggest way to assess the number of time periods of the former that form a time unit of the latter. Relying on an argument grounded on consumption smoothing, I show that the theoretical length of a generation is an increasing function of the discount factor of the optimising agent. Moreover, from an empirical point of view, I give evidence that this analysis corroborates the well-documented nexus that links demographic developments and the path of interest rates, and it offers interesting insights for the calibration of discount rates in computational models.

A vast empirical literature has investigated economies of scale in municipal operations, especially in water and wastewater provision as well as domestic waste management. By contrast, comparatively few studies have been conducted on the extent of scale economies in local government administration. Given the stress placed on scale economies in Australian state and territory government policies aimed at the structural reform of local government through municipal mergers, including in South Australian (SA) local government, the absence of empirical research into administrative scale economies is unfortunate. To address this gap in the empirical literature, in this paper, we consider administrative scale economies in the SA local government system using four-year panel data from 2015–2016 to 2018–2019. We find limited evidence for a relationship between administrative intensity and municipal by population size and for a difference between the administrative intensity of urban and rural councils.

The purpose of this paper was to consider the extent to which drought policy in Australia is consistent with water policy and to also reflect on the coherence of government planning in the Murray–Darling Basin. At the outset, it is contended that the gains from an efficiency-enhancing water policy are likely to be substantially weakened if responses to drought and basin planning run counter to this. The analysis centres on the federal government's response to the Productivity Commission in April 2019, the legacy of interventions in the Murray–Darling Basin and the subsequent “Australian Government Drought Response, Resilience and Preparedness Plan” (the Drought Plan) released in late 2019. Collectively, the analysis adds to the literature that considers coherence within environmental management but also highlights where weaknesses could be given more attention.

Understanding the impact of economic uncertainty shocks at the industrial disaggregated level is critical for both fiscal and monetary policy response. We estimate an SVAR model using quarterly Australian data from 1987:2 to 2018:4. The results of this paper emphasise that individual industries have a unique response to an economic uncertainty shock and do not necessarily reflect the response of the broader aggregate macroeconomy. We found the following stylised facts: (i) The construction industry is the most negatively impacted industry by an economic uncertainty shock in terms of investment, output and employment in Australia, (ii) The financial and insurance services industry also endures a substantial decline to the shock, particularly on investment and employment indicators, and (iii) Economic uncertainty is shown to have less impact on the mining, health care and social assistance and public administration and safety industries.

Unconventional monetary policies are currently implemented in several advanced economies. One of them is known as “yield-curve control,” a policy presently active in Australia. Ordinary pictorial descriptions of this policy do not usually discuss the market mechanism presupposed by the yield-curve control approach nor the economic logic underpinning the expected outcome of this policy tool. The present letter adopts a pedagogical approach and provides an exposition of yield-curve control that separates the immediate effects of the policy from their concomitant economic effects on spending and portfolio investment.

Using daily data, we estimate a vector autoregression model to characterise the dynamic relationship between COVID-19 infections in Australia and the performance of the Australian stock market, specifically the ASX-200. Impulse response functions show that COVID-19 infections in Australia have a significant positive effect on the performance of the stock market: a one standard deviation increase in new registered cases of COVID-19 infections in Australia increases the daily growth rate of the ASX-200 by around half a percentage point. This result is robust to alternative lag selections of the VAR model as suggested by alternative information criteria, including in the model control variables for stock market volatility, that is the ASX-200 VIX; the USD-AUD exchange rate and the international oil price; news by the World Health Organization regarding a COVID-19 pandemic and public health emergency; and the government-imposed shutdown of parts of the Australian economy. We also present estimates of the dynamic relationship between the daily growth rate of the Dow Jones and daily new cases of COVID-19 infections in the United States. The US data show, similar to the Australian data, that there is a significant positive effect of COVID-19 infections on the performance of the stock market.

This study examines whether government ideology affects the relationship between government spending and economic growth in eighty eight countries from 1975 to 2017 using dynamic panel estimators. Previous studies have overlooked the role of government ideology, which can influence economic policies such as government spending. The results show that government spending is negative and significant to economic growth, while left-wing governments are associated with economic growth. However, when moderating for government ideology, the findings show that the marginal effect of government spending is positive for right-wing governments, while the marginal impact of government spending is negative for left-wing governments. The results imply that government spending policies must be aligned with the respective government ideology in order to benefit from further economic growth. Policy implications are discussed.