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Monetary Policy in a Heterogeneous Monetary Union: The Australian Experience

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  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)

Abstract

The geological and climatic conditions of the Australian continent have made Australia a heterogeneous monetary union. Manufacturing and service industries are located in the population centers in the temperate southeast, and mining and pastoral activities take place in the vast expanses of the interior and north. In a small open economy with easy access to international capital markets, monetary policy is transmitted through the exchange rate. Monetary policy affects the interior and north more strongly than the southeastern seaboard because primary goods are mainly exported, whereas services and manufactures are mostly consumed domestically. As a consequence, the Reserve Bank of Australia must reconcile the economic interests of the interior and north and the southeastern seaboard.

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Bibliographic Info

Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 04-08.

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Length: 69 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:uwa:wpaper:04-08

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References

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  2. Dixon, Robert & Shepherd, David, 2001. "Trends and Cycles in Australian State and Territory Unemployment Rates," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 252-69, September.
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  10. Aksoy, Yunus & De Grauwe, Paul & Dewachter, Hans, 2002. "Do asymmetries matter for European monetary policy?," European Economic Review, Elsevier, vol. 46(3), pages 443-469, March.
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  13. 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.
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Cited by:
  1. Robert Dixon & David Shepherd, 2009. "Regional Dimensions of the Australian Business Cycle," Department of Economics - Working Papers Series 1088, The University of Melbourne.
  2. Jeremy Lawson & Daniel Rees, 2008. "A Sectoral Model of the Australian Economy," RBA Research Discussion Papers rdp2008-01, 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. Thomas Walker & David Norman, 2004. "Co-movement of Australian State Business Cycles," Econometric Society 2004 Australasian Meetings 334, Econometric Society.

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