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
Monetary and Fiscal Policy under Imperfect Knowledge. This project lays out an agenda exploring the consequences of imperfect knowledge for macroeconomic dynamics and stabilisation policy. Learning dynamics are central to understanding aggregate fluctuations in periods during which agents have limited information about their environment, as has been the case during and after the Global Financial Crisis. The agenda comprises two lines of inquiry. The first develops theoretical issues relating to ....Monetary and Fiscal Policy under Imperfect Knowledge. This project lays out an agenda exploring the consequences of imperfect knowledge for macroeconomic dynamics and stabilisation policy. Learning dynamics are central to understanding aggregate fluctuations in periods during which agents have limited information about their environment, as has been the case during and after the Global Financial Crisis. The agenda comprises two lines of inquiry. The first develops theoretical issues relating to the design and implementation of monetary and fiscal policy under imperfect knowledge. The second adduces empirical evidence on the classes of possible beliefs that any macroeconomic model should account for.Read moreRead less
Monetary-fiscal policy interactions and their effect on economic performance: new theory, empirics, and an application to Australia. Both fiscal and monetary policy are powerful tools that affect the wellbeing of individuals. Even if current policies are 'responsible', the social cost of uncertainty about the future is extremely high - to which the 2004 'high interest rates under Labour' election campaign or current heated fiscal debates in the US and EU testify. Our analysis will contribute to ....Monetary-fiscal policy interactions and their effect on economic performance: new theory, empirics, and an application to Australia. Both fiscal and monetary policy are powerful tools that affect the wellbeing of individuals. Even if current policies are 'responsible', the social cost of uncertainty about the future is extremely high - to which the 2004 'high interest rates under Labour' election campaign or current heated fiscal debates in the US and EU testify. Our analysis will contribute to the reduction of the social cost by identifying the institutional setting that is robust to 'bad' policymakers, i.e. one in which socially optimal policies are 'institutionalized' (legislated) rather than resting with individuals. Such arrangements are further likely to stimulate investment and economic growth.Read moreRead less
Technological innovation, trade liberalization, unemployment, and policy design. Australia, like all economies, is heavily influenced by technological changes and shifting trade patterns. Understanding these influences, and the impact they have on the distribution of income, the unemployment rate, and the job mix, is very important for the design of appropriate policy initiatives. The proposed research aims to achieve exactly this by developing a mathematical model which incorporates technologic ....Technological innovation, trade liberalization, unemployment, and policy design. Australia, like all economies, is heavily influenced by technological changes and shifting trade patterns. Understanding these influences, and the impact they have on the distribution of income, the unemployment rate, and the job mix, is very important for the design of appropriate policy initiatives. The proposed research aims to achieve exactly this by developing a mathematical model which incorporates technological change, trade, and unemployment. The model will be used to analyse the effects of these changes and, thus, to design optimal policy. The results from this project should also stimulate policy discussions both within Australia and abroad - enriching academic relations between domestic and international universities.Read moreRead less
Discovery Early Career Researcher Award - Grant ID: DE150100708
Funder
Australian Research Council
Funding Amount
$352,000.00
Summary
Understanding the Linkage of Public and Private Risk in the Global Economy. This project aims to develop a richly detailed model of the global financial system including both public and private institutions. By treating the system as a network of interconnected entities, this project aims to introduce new techniques to map and to trace the evolution of risk in the financial system, to forecast the spillover of risk between entities in the system, and to conduct counterfactual analysis of potenti ....Understanding the Linkage of Public and Private Risk in the Global Economy. This project aims to develop a richly detailed model of the global financial system including both public and private institutions. By treating the system as a network of interconnected entities, this project aims to introduce new techniques to map and to trace the evolution of risk in the financial system, to forecast the spillover of risk between entities in the system, and to conduct counterfactual analysis of potential policy measures. This project will investigate the link between spillover intensity and the existing research on extreme events in financial data. By studying how the recent crisis spread through the global financial system, this project aims to enhance our ability to foresee future crises and to mitigate their impact and costs.Read moreRead less
Economic modelling for Australia and the USA: forecasts, policy analysis and comparative studies of technology and labour market adjustment. This project involves: a fundamental overhaul of MONASH, a widely used detailed dynamic model of the Australian economy; the creation of MONASH-USA for the United States; and several model-based Australia/US comparisons. MONASH's database and parameters will be updated, and its theoretical specification improved. MONASH-USA will be an advance over existing ....Economic modelling for Australia and the USA: forecasts, policy analysis and comparative studies of technology and labour market adjustment. This project involves: a fundamental overhaul of MONASH, a widely used detailed dynamic model of the Australian economy; the creation of MONASH-USA for the United States; and several model-based Australia/US comparisons. MONASH's database and parameters will be updated, and its theoretical specification improved. MONASH-USA will be an advance over existing US models and will generate policy results of interest both in the United States and Australia. MONASH-USA will have an excellent database and is likely to produce insights on parameter estimation. These will be applicable in Australia. Together, MONASH and MONASH-USA will facilitate comparative studies of technology and labour-market performance.Read moreRead less
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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State & territory economic performance and national economic policy. The research is intended to provide a better understanding of the relationship between national and state & territory economic behaviour in Australia and the relative strengths of common and idiosyncratic factors affecting economic performance across the states and territories. The results of the research will help to inform both national and sub-national economic policies and hence contribute to better economic and social outc ....State & territory economic performance and national economic policy. The research is intended to provide a better understanding of the relationship between national and state & territory economic behaviour in Australia and the relative strengths of common and idiosyncratic factors affecting economic performance across the states and territories. The results of the research will help to inform both national and sub-national economic policies and hence contribute to better economic and social outcomes in Australia.Read moreRead less
Designing world-class venture capital programs to support commercialisation of Australian research during and beyond an economic crisis. Government support of venture capital investment is vital for Australia’s economic prosperity. This project examines how foreign governments have tackled the effect of the financial crisis on such investment and provides policy options for ensuring Australia maintains internationally competitive programs in challenging economic times.
Analysis of Fiscal Policy Responses to Macroeconomic Conditions in Australia and the US using Real Time Data. This project investigates the evolution of Australian and US fiscal policy responses to macroeconomic conditions and examines the implications for future levels of public debt. A real time database of fiscal indicators will be constructed to capture information available to policymakers when making decisions. Econometric analysis of the data will involve a flexible approach that captures ....Analysis of Fiscal Policy Responses to Macroeconomic Conditions in Australia and the US using Real Time Data. This project investigates the evolution of Australian and US fiscal policy responses to macroeconomic conditions and examines the implications for future levels of public debt. A real time database of fiscal indicators will be constructed to capture information available to policymakers when making decisions. Econometric analysis of the data will involve a flexible approach that captures how policy has changed in its focus on economic stabilisation and fiscal sustainability. The analysis also allows for forecasts of public debt that take into account the interaction between policy and the economy. The results and methods will be useful in evaluating the stance of fiscal policy and its implications for the sustainability of public debt.Read moreRead less