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Living Standards, Terms of Trade and Foreign Ownership: Reflections on the Australian Mining Boom

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  • R.G. Gregory

Abstract

Australia is experiencing its largest mining boom for more than a century and a half. This paper explores, from a national perspective, important economic differences that arise when a mining boom, such as the current one, is generated by sustained export price increases (trading gains) rather than export volume increases. Since 2003 the terms of trade changes – through their direct trading gain effect and indirect real GDP effects - have increased Australian living standards. The increase, measured from official data and relative to the US, is about 25 per cent; an increase which probably places Australian living standards well above those of the US. But official data inadequately adjusts for foreign ownership of mining resources suggesting that this estimate is probably a little too high.

Suggested Citation

  • R.G. Gregory, 2011. "Living Standards, Terms of Trade and Foreign Ownership: Reflections on the Australian Mining Boom," CEPR Discussion Papers 656, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:656
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    File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP656.pdf
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    References listed on IDEAS

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    Cited by:

    1. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    2. John Freebairn, 2015. "Mining booms and the exchange rate," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), pages 533-548, October.
    3. Fleming, David A. & Measham, Thomas G., 2014. "Local job multipliers of mining," Resources Policy, Elsevier, vol. 41(C), pages 9-15.
    4. Yogi Vidyattama & Maheshwar Rao & Itismita Mohanty & Robert Tanton, 2014. "Modelling the impact of declining Australian terms of trade on the spatial distribution of income," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 100-126.
    5. Kotey, Bernice & Rolfe, John, 2014. "Demographic and economic impact of mining on remote communities in Australia," Resources Policy, Elsevier, vol. 42(C), pages 65-72.
    6. repec:spr:soinre:v:132:y:2017:i:3:d:10.1007_s11205-016-1337-y is not listed on IDEAS
    7. repec:spr:minecn:v:31:y:2018:i:1:d:10.1007_s13563-018-0153-z is not listed on IDEAS
    8. Allen, Creina & Day, Garth, 2014. "Depletion of non-renewable resources imported by China," China Economic Review, Elsevier, vol. 30(C), pages 235-243.

    More about this item

    Keywords

    resource booms; terms of trade; real GDP; foreign ownership; economic growth;

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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