Explaining the Recent Performance of Australia’s Manufactured Exports
AbstractAustralia’s manufactured exports have grown rapidly since the mid-1980s. The growth of Australia’s trading partners and the overall depreciation of the exchange rate, while important, do not fully explain this growth. This paper seeks to explain the remaining growth in reference to firms’ cost structures, in particular their sunk cost structures. A model is developed. It shows how, in the presence of sunk costs, a shock to the economy can cause a permanent increase in the level of exports. This model is applied to Australia’s manufactured exports. The results suggest that their recent growth may not be undone, even if the recent economic shocks faced by exporters are reversed.
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Bibliographic InfoPaper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp9310.
Date of creation: Aug 1993
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- Nicholas de Roos & Bill Russell, 2000.
"The Exports Transmission Mechanism of Foreign Business Cycles to Australia,"
Dundee Discussion Papers in Economics
110, Economic Studies, University of Dundee.
- de Roos, Nicolas & Russell, Bill, 2002. "The Exports Transmission Mechanism of Foreign Business Cycles to Australia," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 50-59, March.
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