The Role of a Central Bank’s Balance Sheet in Shaping the Economy. In response to the global financial crisis, the world’s major central banks cut their rates to near zero and implemented untested unconventional monetary policies, significantly expanding the size and composition of their balance sheets. More than a decade later, the Reserve Bank of Australia is considering similar balance sheet policies. This proposal aims to develop various frameworks that can be used to simulate and evaluate w ....The Role of a Central Bank’s Balance Sheet in Shaping the Economy. In response to the global financial crisis, the world’s major central banks cut their rates to near zero and implemented untested unconventional monetary policies, significantly expanding the size and composition of their balance sheets. More than a decade later, the Reserve Bank of Australia is considering similar balance sheet policies. This proposal aims to develop various frameworks that can be used to simulate and evaluate when and how to eventually undo unconventional monetary policies in order to prevent a prolonged recession. Thus this research proposal will contribute to the current Australian monetary policy debate while providing some insights on how best to implement such policies, improving the living standards of Australians.Read moreRead less
Economic policy when interest rates are zero. This Project studies economic policy when interest rates are zero. Low interest rate environments constrain monetary policy because central banks cannot lower rates to raise demand. We exploit recent international experience with zero rates to understand why new policies have had mixed success. We argue different outcomes across countries arise because of different degrees of credibility and familiarity with new policy initiatives. We provide empiric ....Economic policy when interest rates are zero. This Project studies economic policy when interest rates are zero. Low interest rate environments constrain monetary policy because central banks cannot lower rates to raise demand. We exploit recent international experience with zero rates to understand why new policies have had mixed success. We argue different outcomes across countries arise because of different degrees of credibility and familiarity with new policy initiatives. We provide empirical support for this view and study the consequences of imperfectly credible policy. We characterize how monetary policy (conventional and unconventional) and fiscal policy can be used to greatest effect in low interest rate environments and quantify the welfare implications for Australia. Read moreRead less
Banking System Competition and the Macro-economy. Australia has one of the most concentrated banking sectors in the world, generating concerns regarding its efficiency. This project aims to develop unified frameworks to understand and evaluate quantitatively how the structure of the banking industry affects the macro-economy and provide policy recommendations for establishing a healthy and efficient banking industry. This project expects to improve understanding of the welfare trade-off between ....Banking System Competition and the Macro-economy. Australia has one of the most concentrated banking sectors in the world, generating concerns regarding its efficiency. This project aims to develop unified frameworks to understand and evaluate quantitatively how the structure of the banking industry affects the macro-economy and provide policy recommendations for establishing a healthy and efficient banking industry. This project expects to improve understanding of the welfare trade-off between bank competition and economic well-being to enable policymakers to better determine the optimal concentration of banking sector in Australia. This will enhance the productivity and international competitiveness of Australia’s financial system and the broader economy.Read moreRead less
Discovery Early Career Researcher Award - Grant ID: DE120102589
Funder
Australian Research Council
Funding Amount
$375,000.00
Summary
Monetary policy and models of money, credit and banking. This project develops models with money and credit following recent developments in monetary theory with microfoundations. The objectives of the project are to understand the fundamental functions of credit, how credit affects the aggregate economy, and how credit affects the transmission of monetary policy.
Money, price and output dynamics: a segmented asset markets approach. This project studies the importance of asset market frictions and the cross-sectional composition of nominal spending across households for the monetary policy transmission mechanism (that is, for the channels by which monetary policy affects the broader macro-economy).
Nowcasting and Interpreting the Australian Economy. This project aims to investigate methods for nowcasting and interpreting the Australian economy. This is determining the current state of the economy and the factors contributing to it.
This project expects to generate new knowledge on how unconventional, new, data sources and innovative methods can be used to in nowcasting and how the Australian economy can be modelled.
The expected outcomes include timely new indicators of the state of the ec ....Nowcasting and Interpreting the Australian Economy. This project aims to investigate methods for nowcasting and interpreting the Australian economy. This is determining the current state of the economy and the factors contributing to it.
This project expects to generate new knowledge on how unconventional, new, data sources and innovative methods can be used to in nowcasting and how the Australian economy can be modelled.
The expected outcomes include timely new indicators of the state of the economy, and the factors contributing to it. This should provide significant benefits through informing the conduct of Australian macroeconomic policy, as the appropriate policy response depends not only on knowing the current state of the economy but understanding the economic factors underlying it.
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Distorted Beliefs and Asset Price Disconnect Puzzles. Asset price booms and busts have broad ranging implications for households. Despite this, models used for policy analysis struggle to explain asset prices and their implications for the macroeconomy. This project will deliver frontier macro-finance research to inform academics and policymakers on how to model asset price booms and busts, to explain why equity and house price falls appear to have small versus large effects, and how to design e ....Distorted Beliefs and Asset Price Disconnect Puzzles. Asset price booms and busts have broad ranging implications for households. Despite this, models used for policy analysis struggle to explain asset prices and their implications for the macroeconomy. This project will deliver frontier macro-finance research to inform academics and policymakers on how to model asset price booms and busts, to explain why equity and house price falls appear to have small versus large effects, and how to design effective policy responses. Led by internationally recognized experts in macroeconomics, this research proposal is perfectly positioned to deliver scientific peer-reviewed research and embed outcomes through evidenced partnerships with the Reserve Bank of Australia and the Federal Department of Treasury.Read moreRead less
Discovery Early Career Researcher Award - Grant ID: DE230100029
Funder
Australian Research Council
Funding Amount
$345,197.00
Summary
Variational Inference for Intractable and Misspecified State Space Models. State space models (SSMs) are popularly used to model economic variables such as inflation and financial volatility. Variational inference is a technique that allows for fast implementation of SSMs, but whose properties are yet to be understood. This project aims to study the properties of variational inference for SSMs used in economics.
This research will develop new variational inference techniques to improve inferent ....Variational Inference for Intractable and Misspecified State Space Models. State space models (SSMs) are popularly used to model economic variables such as inflation and financial volatility. Variational inference is a technique that allows for fast implementation of SSMs, but whose properties are yet to be understood. This project aims to study the properties of variational inference for SSMs used in economics.
This research will develop new variational inference techniques to improve inferential and predictive accuracy from SSMs. An expected implication of this project is that it will expand the ability of economic institutions to employ larger SSMs, which will allow for more accurate models for economic variables. This will provide significant social benefits by leading to better informed economic policy.
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Public Finance and Cryptocurrencies. This project aims to analyse the impact of cryptocurrency technology on taxation and the provision of public goods in Australia. The project will identify the historical relationship between money technologies and public finance, examine the impact of cryptocurrencies in relation to the modern state, and investigate the potential of utilising cryptocurrencies in the provision of public goods. The outcomes of the research will expand theoretical and practical ....Public Finance and Cryptocurrencies. This project aims to analyse the impact of cryptocurrency technology on taxation and the provision of public goods in Australia. The project will identify the historical relationship between money technologies and public finance, examine the impact of cryptocurrencies in relation to the modern state, and investigate the potential of utilising cryptocurrencies in the provision of public goods. The outcomes of the research will expand theoretical and practical understanding of public finance in a world of cryptocurrencies. The project findings will provide guidance to Australian and international policymakers to prepare for potential disruptions to taxation and public goods provision. Read moreRead less
Understanding the sources of secular stagnation. This project aims to examine why long-run projections of output, inflation, and interest rates have become lower for many economies in recent years resulting in a phenomenon often referred to as secular stagnation. The project intends to develop new econometric tools to account for sources of structural breaks and stochastic trends in order to quantify the roles of productivity growth, financial shocks, demographics, and inflation expectations in ....Understanding the sources of secular stagnation. This project aims to examine why long-run projections of output, inflation, and interest rates have become lower for many economies in recent years resulting in a phenomenon often referred to as secular stagnation. The project intends to develop new econometric tools to account for sources of structural breaks and stochastic trends in order to quantify the roles of productivity growth, financial shocks, demographics, and inflation expectations in driving secular stagnation. Expected outcomes include findings that will help guide macroeconomic policy responses to stagnation and new econometric tools that will support future applied research on changes in the behaviour of macroeconomic variables.Read moreRead less