IDEAS home Printed from https://ideas.repec.org/a/spr/jbuscr/v12y2016i2d10.1007_s41549-016-0007-0.html
   My bibliography  Save this article

Observations on the Australian Business Cycle

Author

Listed:
  • Nopphawan Photphisutthiphong

    (Rajamangala University of Technology Thanyaburi)

  • Mark Weder

    (The University of Adelaide)

Abstract

What accounts for the Australian business cycle, what caused the economic slumps and what factors contributed to the decades’ buoyancy? To understand these questions, the current paper decomposes the Australian business cycle into its sources for the period 1980–2014. Our main finding is that the efficiency wedge and the investment wedge are the major forces behind Australian output variations. The efficiency wedge is behind the growth slowdown that emerged in the mid 2000s.

Suggested Citation

  • Nopphawan Photphisutthiphong & Mark Weder, 2016. "Observations on the Australian Business Cycle," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 12(2), pages 141-164, December.
    • Handle: RePEc:spr:jbuscr:v:12:y:2016:i:2:d:10.1007_s41549-016-0007-0
    DOI: 10.1007/s41549-016-0007-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41549-016-0007-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41549-016-0007-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mark Weder, 2006. "The Role Of Preference Shocks And Capital Utilization In The Great Depression," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1247-1268, November.
    2. Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999. "The financial accelerator in a quantitative business cycle framework," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393, Elsevier.
    3. Chari, V.V. & Kehoe, Patrick J. & McGrattan, Ellen R., 2008. "Are structural VARs with long-run restrictions useful in developing business cycle theory?," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1337-1352, November.
    4. Erasmus Kersting, 2008. "The 1980s Recession in the UK: A Business Cycle Accounting Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 179-191, January.
    5. Harrison, Sharon G. & Weder, Mark, 2006. "Did sunspot forces cause the Great Depression?," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1327-1339, October.
    6. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
    7. Baxter, Marianne, 1996. "Are Consumer Durables Important for Business Cycles?," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 147-155, February.
    8. Schmitt-Grohe, Stephanie & Uribe, Martin, 2003. "Closing small open economy models," Journal of International Economics, Elsevier, vol. 61(1), pages 163-185, October.
    9. Saul Eslake, 2011. "Productivity: The Lost Decade," RBA Annual Conference Volume (Discontinued), in: Hugo Gerard & Jonathan Kearns (ed.),The Australian Economy in the 2000s, Reserve Bank of Australia.
    10. Chakraborty Suparna & Otsu Keisuke, 2013. "Business cycle accounting of the BRIC economies," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-33, September.
    11. Ben Dolman, 2009. "What Happened to Australia's Productivity Surge?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 243-263, September.
    12. Farmer Roger E. A. & Guo Jang-Ting, 1994. "Real Business Cycles and the Animal Spirits Hypothesis," Journal of Economic Theory, Elsevier, vol. 63(1), pages 42-72, June.
    13. Ruy Lama, 2011. "Accounting for Output Drops in Latin America," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 295-316, April.
    14. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
    15. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2007. "Business Cycle Accounting," Econometrica, Econometric Society, vol. 75(3), pages 781-836, May.
    16. Kamihigashi, Takashi, 1996. "Real business cycles and sunspot fluctuations are observationally equivalent," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 105-117, February.
    17. Lawrence J. Christiano & Joshua M. Davis, 2006. "Two flaws in business cycle dating," Working Papers (Old Series) 0612, Federal Reserve Bank of Cleveland.
    18. Lane, Philip & Milesi-Ferretti, Gian Maria, "undated". "External Wealth of Nations," Instructional Stata datasets for econometrics extwealth, Boston College Department of Economics.
    19. Kobayashi, Keiichiro & Nakajima, Tomoyuki & Inaba, Masaru, 2012. "Collateral Constraint And News-Driven Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 16(5), pages 752-776, November.
    20. Jarkko P. Jääskelä & Kristoffer Nimark, 2011. "A Medium‐Scale New Keynesian Open Economy Model of Australia," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 11-36, March.
    21. Timothy J. Kehoe & Edward C. Prescott, 2002. "Great Depressions of the Twentieth Century," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 1-18, January.
    22. Lawrence J. Christiano & Joshua M. Davis, 2006. "Two Flaws In Business Cycle Accounting," NBER Working Papers 12647, National Bureau of Economic Research, Inc.
    23. Harold L. Cole & Lee E. Ohanian, 2004. "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 779-816, August.
    24. Bridji, Slim, 2013. "The French Great Depression: A business cycle accounting analysis," Explorations in Economic History, Elsevier, vol. 50(3), pages 427-445.
    25. Timothy J. Kehoe & Edward C. Prescott, 2007. "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott.
    26. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Bo & Dai, Wei, 2020. "Trend inflation and macroeconomic stability in a small open economy," Economic Modelling, Elsevier, vol. 91(C), pages 769-778.
    2. Jiang, Dou, 2023. "Output drops in ASEAN-5 countries: A business cycle accounting perspective," Economic Modelling, Elsevier, vol. 126(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruy Lama, 2011. "Accounting for Output Drops in Latin America," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 295-316, April.
    2. Franck Portier, 2008. "Interprétation d'épisodes historiques à l'aide de modèles dynamiques stochastiques d'équilibre général," Economie & Prévision, La Documentation Française, vol. 0(4), pages 33-46.
    3. Brinca, P. & Chari, V.V. & Kehoe, P.J. & McGrattan, E., 2016. "Accounting for Business Cycles," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1013-1063, Elsevier.
    4. Brinca, Pedro & Costa-Filho, João & Loria, Francesca, 2020. "Business Cycle Accounting: what have we learned so far?," MPRA Paper 100180, University Library of Munich, Germany.
    5. Hevia, Constantino, 2014. "Emerging market fluctuations: What makes the difference?," Journal of International Economics, Elsevier, vol. 94(1), pages 33-49.
    6. Bridji, Slim, 2013. "The French Great Depression: A business cycle accounting analysis," Explorations in Economic History, Elsevier, vol. 50(3), pages 427-445.
    7. Jiang, Dou, 2023. "Output drops in ASEAN-5 countries: A business cycle accounting perspective," Economic Modelling, Elsevier, vol. 126(C).
    8. Özer Karagedikli & Troy Matheson & Christie Smith & Shaun P. Vahey, 2010. "RBCs AND DSGEs: THE COMPUTATIONAL APPROACH TO BUSINESS CYCLE THEORY AND EVIDENCE," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 113-136, February.
    9. Brinca, Pedro, 2014. "Distortions in the neoclassical growth model: A cross-country analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 1-19.
    10. Otsu Keisuke, 2010. "A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-39, July.
    11. Antón Sarabia Arturo, 2008. "Accounting for Output Fluctuations in Mexico," Working Papers 2008-05, Banco de México.
    12. Juan Carlos Conesa & Pau S. Pujolas, 2019. "The Canadian productivity stagnation, 20022014," Canadian Journal of Economics, Canadian Economics Association, vol. 52(2), pages 561-583, May.
    13. Hirata, Hideaki & Otsu, Keisuke, 2016. "Accounting for the economic relationship between Japan and the Asian Tigers," Journal of the Japanese and International Economies, Elsevier, vol. 41(C), pages 57-68.
    14. Yannick Kalantzis, 2015. "Financial Fragility in Small Open Economies: Firm Balance Sheets and the Sectoral Structure," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(3), pages 1194-1222.
    15. Luca Pensieroso, 2007. "Real Business Cycle Models Of The Great Depression: A Critical Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 110-142, February.
    16. Dooyeon Cho & Dong-Eun Rhee, 2015. "An assessment of inflation targeting in a quantitative monetary business cycle framework: evidence from four early adopters," Applied Economics, Taylor & Francis Journals, vol. 47(32), pages 3395-3413, July.
    17. Notz, Stefan & Rosenkranz, Peter, 2021. "Business cycles in emerging markets: The role of liability dollarization and valuation effects," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 424-450.
    18. Jacek Rothert & Jacob Short, 2023. "Non-Traded Goods, Factor Markets Frictions, and International Capital Flows," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 158-177, April.
    19. Suparna Chakraborty & Keisuke Otsu, 2012. "Deconstructing Growth - A Business Cycle Accounting Approach with application to BRICs," Studies in Economics 1212, School of Economics, University of Kent.
    20. Brinca, Pedro & João, Costa-Filho, 2021. "Output falls and the international transmission of crises," MPRA Paper 107297, University Library of Munich, Germany.

    More about this item

    Keywords

    Australia; Economic fluctuations; Business cycle accounting;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jbuscr:v:12:y:2016:i:2:d:10.1007_s41549-016-0007-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.