Quantifying Australia's "Three Speed" Boom
AbstractThis paper examines Australia's terms of trade boom since 2003 with a particular interest in quantifying the links between the terms of trade and sectoral performance and identifying an associated 'secondary services boom'. Comparative static general equilibrium modelling and empirical analysis are used to examine the sectoral impacts on employment and income. The modelling confirms the services expansion of sufficient scale to tighten national labour markets and it projects an associated manufacturing contraction. A separate empirical analysis approaches the same links using vector auto-regressions estimated from pre-boom Australian data (1989 through 2002) and out of sample simulations over the subsequent boom period. The secondary services boom appears clearly but the results on manufacturing are ambiguous. Actual employment booms were larger, and manufacturing sector performance better, than predicted on the estimated VARs, suggesting that the recent boom accompanied changes in industrial structure and underlying behavioural parameters that have been favourable to surviving manufacturing firms.
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Bibliographic InfoPaper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-10.
Length: 42 pages
Date of creation: Feb 2013
Date of revision:
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Resources boom; Dutch disease; general equilibrium; mining; secondary services boom; response asymmetry;
Other versions of this item:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-24 (All new papers)
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