Financial Deregulation and the Monetary Transmission Mechanism
Major changes to the Australian financial system occurred in the 1980s that were potentially important for the effects of monetary policy on economic activity. Using vector autoregressive econometric techniques we find that, in fact, the deregulation of the financial system has made very little difference to the reduced form relationships between interest rates, employment growth, inflation and the growth rate of real credit. We find that interest rates are an important determinant of both the business cycle and inflation, with credit being much less influential. We also find that monetary policy reacts to unexpected movements in real variables but does not react to unexpected changes in the rate of inflation.
|Date of creation:||Nov 1990|
|Contact details of provider:|| Postal: GPO Box 3947, Sydney NSW 2001|
Web page: http://www.rba.gov.au/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp9008. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paula Drew)
If references are entirely missing, you can add them using this form.