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Monetary policy in a heterogeneous monetary union: the Australian experience

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  • Ernst Juerg Weber

Abstract

Australia is a monetary union with strong regional specialization. Manufacturing and service industries are located in the population centres on the south-eastern seaboard, and mining and pastoral activities take place in the interior and north of the continent. Monetary policy affects the interior and north more strongly than the south-eastern seaboard because Australian primary goods are mostly exported and the exchange rate provides the main transmission channel for monetary policy. The Reserve Bank of Australia must consider the economic interests of the interior and north and the south-eastern seaboard. Since monetary policy cannot differentiate between regions, there is a need for interregional macroeconomic risk-sharing.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 21 ()
Pages: 2487-2495

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Handle: RePEc:taf:applec:v:38:y:2006:i:21:p:2487-2495

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Cited by:
  1. Jeremy Lawson & Daniel Rees, 2008. "A Sectoral Model of the Australian Economy," RBA Research Discussion Papers rdp2008-01, Reserve Bank of Australia.
  2. David Norman & Thomas Walker, 2004. "Co-movement of Australian State Business Cycles," RBA Research Discussion Papers rdp2004-09, Reserve Bank of Australia.
  3. Ridhwan, M.M. & Nijkamp, P. & Rietveld, P. & Groot, H.L.F. de, 2008. "Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  4. Robert Dixon & David Shepherd, 2009. "Regional Dimensions of the Australian Business Cycle," Department of Economics - Working Papers Series 1088, The University of Melbourne.
  5. Thomas Walker & David Norman, 2004. "Co-movement of Australian State Business Cycles," Econometric Society 2004 Australasian Meetings 334, Econometric Society.

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