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Understanding the appreciation of the Australian dollar and its policy implications

  • Phil Garton

    (Treasury, Government of Australia)

  • Danial Gaudry

    (Treasury, Government of Australia)

  • Rhett Wilcox

    (Treasury, Government of Australia)

Registered author(s):

    The Australian dollar has appreciated strongly over the past decade, leading to increased concerns over the impacts of the high exchange rate on trade-exposed sectors of the economy. This paper examines the underlying drivers of this rise, the exchange rate’s role as a macroeconomic shock absorber and the implications of various policy options that might be directed at reducing the exchange rate.

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    File URL: http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2012/Economic%20Roundup%20Issue%202/Downloads/03_Appreciation_of_the_Aust_dollar.ashx
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    Article provided by The Treasury, Australian Government in its journal Economic Roundup.

    Volume (Year): (2012)
    Issue (Month): 2 (August)
    Pages: 39-61

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    Handle: RePEc:tsy:journl:journl_tsy_er_2012_2_3
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    1. Gruen, David W R & Wilkinson, Jenny, 1994. "Australia's Real Exchange Rate--Is It Explained by the Terms of Trade or by Real Interest Differentials?," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 204-19, June.
    2. Phil Garton, 2012. "Sovereign wealth funds and the exchange rate: comparing resource booms in Australia, Chile and Norway," Economic Roundup, The Treasury, Australian Government, issue 2, pages 19-38, August.
    3. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
    4. Angelo Ranaldo & Paul Söderlind, 2007. "Safe Haven Currencies," University of St. Gallen Department of Economics working paper series 2007 2007-22, Department of Economics, University of St. Gallen.
    5. Henry, Olan T. & Olekalns, Nilss, 2002. "Does the Australian dollar real exchange rate display mean reversion," Journal of International Money and Finance, Elsevier, vol. 21(5), pages 651-666, October.
    6. Dominguez, Kathryn M & Frankel, Jeffrey A, 1993. "Does Foreign-Exchange Intervention Matter? The Portfolio Effect," American Economic Review, American Economic Association, vol. 83(5), pages 1356-69, December.
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