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Inflation, Unemployment and the NAIRU in Australia

Author

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  • Grosby, M.
  • Olekalns, N.

Abstract

In this paper we investigate the relationship between inflation and unemployment in Australia, post 1959. We focus on two features of the data: firstly, we find that forecasting models are surprisingly through ou sample period. We also estimate the nonaccelaring inflation rate of unemployment (NAIRU), focussing on both the level of the NAIRU, and the stability and precision of our estimates. We find that estimates of the NAIRU range from as low as 2.3% to as high as 9.5% in Australia over this period.

Suggested Citation

  • Grosby, M. & Olekalns, N., 1996. "Inflation, Unemployment and the NAIRU in Australia," Papers 96/31, New South Wales - School of Economics.
  • Handle: RePEc:fth:nesowa:96/31
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    References listed on IDEAS

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    Cited by:

    1. Meredith Beechey & Pär Österholm, 2008. "A Bayesian Vector Autoregressive Model with Informative Steady-state Priors for the Australian Economy," The Economic Record, The Economic Society of Australia, vol. 84(267), pages 449-465, December.
    2. Robert Dixon & David Shepherd & James Thomson, 2001. "Regional Unemployment Disparities in Australia," Regional Studies, Taylor & Francis Journals, vol. 35(2), pages 93-102.
    3. Nicolaas Groenewold & Sam Hak Kan Tang, 2001. "The Asian Financial Crisis and Natural Rate of Unemployment: Estimates from a Structural VAR for the Newly Industrializing Economies of Asia," Economics Discussion / Working Papers 01-12, The University of Western Australia, Department of Economics.
    4. Marika Karanassou & Hector Sala, 2010. "Labour Market Dynamics in Australia: What Drives Unemployment?," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 185-209, June.
    5. G.C. Lim & Robert Dixon & Sarantis Tsiaplias, 2009. "Phillips Curve and the Equilibrium Unemployment Rate," The Economic Record, The Economic Society of Australia, vol. 85(271), pages 371-382, December.
    6. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Oreste Napolitano & Alberto Montagnoli, 2010. "The European Unemployment Gap and the Role of Monetary Policy," Economics Bulletin, AccessEcon, vol. 30(2), pages 1346-1358.
    8. Ian M McDonald, 1997. "Discussion of 'The Debate on Alternatives for Monetary Policy in Australia'," RBA Annual Conference Volume,in: Philip Lowe (ed.), Monetary Policy and Inflation Targeting Reserve Bank of Australia.
    9. David Shepherd & Robert Dixon, 2002. "The Relationship Between Regional and National Unemployment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 469-480.
    10. Robert Dixon & John Freebairn & Emayenesh Seyoum-Tegegn, 2008. "State & Territory Beveridge Curvesand the National Equilibrium Unemployment Rate," Department of Economics - Working Papers Series 1033, The University of Melbourne.
    11. 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 252-269, September.
    12. Debelle, Guy & Vickery, James, 1998. "Is the Phillips Curve a Curve? Some Evidence and Implications for Australia," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 384-398, December.
    13. N. Groenewold & A.J. Hagger, 1998. "The Australian Natural Rate of Unemployment: Some estimates from a structural VAR," Economics Discussion / Working Papers 98-23, The University of Western Australia, Department of Economics.

    More about this item

    Keywords

    FINANCIAL POLICY; UNEMPLOYMENT;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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