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Modelling Inflation in Australia

Author

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  • Gordon de Brouwer

    (Reserve Bank of Australia)

  • Neil R. Ericsson

    (Reserve Bank of Australia)

Abstract

This paper develops an empirically constant, data-coherent, error correction model for inflation in Australia. The level of consumer prices is a mark-up over domestic and import costs, with adjustments for dynamics and relative aggregate demand. We address issues of cointegration, general to specific modelling, dynamic specification, model evaluation and testing, parameter constancy, and exogeneity. We also test this model against existing models of Australian prices: this model encompasses (but is not encompassed by) the existing models.

Suggested Citation

  • Gordon de Brouwer & Neil R. Ericsson, 1995. "Modelling Inflation in Australia," RBA Research Discussion Papers rdp9510, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp9510
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    References listed on IDEAS

    as
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