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MARTIN Has Its Place: A Macroeconometric Model of the Australian Economy

Author

Listed:
  • Alexander Ballantyne

    (Reserve Bank of Australia)

  • Tom Cusbert

    (Reserve Bank of Australia)

  • Richard Evans

    (Reserve Bank of Australia)

  • Rochelle Guttmann

    (Reserve Bank of Australia)

  • Jonathan Hambur

    (Reserve Bank of Australia)

  • Adam Hamilton

    (Reserve Bank of Australia)

  • Elizabeth Kendall

    (Reserve Bank of Australia)

  • Rachael McCririck

    (Reserve Bank of Australia)

  • Gabriela Nodari

    (Reserve Bank of Australia)

  • Daniel Rees

    (Reserve Bank of Australia)

Abstract

This paper introduces MARTIN – the Reserve Bank of Australia's (RBA) current model of the Australian economy. MARTIN is an economy-wide model used to produce forecasts and conduct counterfactual scenario analysis. In contrast to other large-scale models used at the RBA – and at many other central banks – which adhere to a narrow theoretical view of how the economy operates, MARTIN is a macroeconometric model that consists of a system of reduced form equations built to strike a balance between theoretical rigour and empirical realism. Most of the model's equations align closely with the way RBA staff typically interpret the behaviour of individual economic variables. However, combining these individual equations in a system can bring fresh insights that are not possible without model-based analysis. In the paper we provide an overview of the model, outline its core behavioural equations and describe its empirical properties. The Online Appendix presents the full set of model equations.

Suggested Citation

  • Alexander Ballantyne & Tom Cusbert & Richard Evans & Rochelle Guttmann & Jonathan Hambur & Adam Hamilton & Elizabeth Kendall & Rachael McCririck & Gabriela Nodari & Daniel Rees, 2019. "MARTIN Has Its Place: A Macroeconometric Model of the Australian Economy," RBA Research Discussion Papers rdp2019-07, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp2019-07
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    File URL: https://www.rba.gov.au/publications/rdp/2019/pdf/rdp2019-07.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Australian economy; macroeconomic model;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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