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Monetary Policy in a Heterogeneous Monetary Union: The Australian Experience

  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)

The geological and climatic conditions of the Australian continent have made Australia a heterogeneous monetary union. Manufacturing and service industries are located in the population centers in the temperate southeast, and mining and pastoral activities take place in the vast expanses of the interior and north. In a small open economy with easy access to international capital markets, monetary policy is transmitted through the exchange rate. Monetary policy affects the interior and north more strongly than the southeastern seaboard because primary goods are mainly exported, whereas services and manufactures are mostly consumed domestically. As a consequence, the Reserve Bank of Australia must reconcile the economic interests of the interior and north and the southeastern seaboard.

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File URL: http://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2004/04_08_Weber.pdf
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Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 04-08.

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Length: 69 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:uwa:wpaper:04-08
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