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Inflation and Capacity Constraints in Australian Manufacturing Industry

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  • David Shepherd
  • Ciaran Driver

Abstract

In the present paper we estimate a model of price‐cost inflation for Australia using business survey responses of firms in the manufacturing sector. The data allow us to circumvent a number of key statistical problems, related in particular to the measurement of costs and structural changes in the model. Equally important, the data allow a new and more detailed perspective on the nature of supply constraints affecting inflation in the manufacturing sector. A new finding is that capital constraints have been more important in generating inflationary pressure than labour constraints or general indicators of capacity utilisation.

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  • David Shepherd & Ciaran Driver, 2003. "Inflation and Capacity Constraints in Australian Manufacturing Industry," The Economic Record, The Economic Society of Australia, vol. 79(245), pages 182-195, June.
    • Handle: RePEc:bla:ecorec:v:79:y:2003:i:245:p:182-195:b
    DOI: 10.1111/1475-4932.t01-1-00097
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    Cited by:

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    3. Gunnar Bårdsen & Stan Hurn & Zoë Mchugh, 2007. "Modelling Wages and Prices in Australia," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 143-158, June.

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