Showing papers in "Economic Record in 1983"
TL;DR: In this paper, the role of prices and factor endowments in the determination of Australian imports is examined, where the supply of capital is assumed fixed in the short run and variable in the medium run, and direct and indirect estimates of short-run and medium-run import price and quantity elasticities are derived.
Abstract: This paper examines the role of prices and factor endowments in the determination of Australian imports. We consider two factors, labour and capital. The supply of capital is assumed fixed, labour is assumed fixed in the short run. and variable in the medium run, Direct as well as indirect estimates of short-run and medium-run import price and quantity elasticities are derived. Allowance is made for technological change, and various separability hypotheses are tested. As predicted by the Le Châtelier Principle. the own price elasticity of imports is larger in the medium run than in the short run.
36 citations
TL;DR: In this article, the role of relative factor intensity and degree of factor mobility in the model of a booming export industry is discussed. And the authors show that, contrary to popular beliefs, the mineral export boom may result in an expansion of all industries, an increase in the profitability of the traditional tradeables sector, and a fall in the relative price of non-tradeables.
Abstract: It is argued that the roles of relative factor intensity and of the degree of factor mobility have been neglected in models of booming export industries. This paper shows that, contrary to popular beliefs. the mineral export boom may result in (a) an expansion of all industries, (b) an increase in the profitability of the traditional tradeables sector, and(c) a fall in the relative price of non-tradeables.
34 citations
TL;DR: In this paper, a simple model is used to analyze the role of changing relative wages in industry labour market adjustment between 1948-49 and 1979-80, and it was found that modest changes in wage relativities which were generally in the right direction.
Abstract: A simple model is used to analyze the role of changing relative wages in industry labour market adjustment between 1948–49 and 1979–80. Not with standing Australia's highly centralized system of wage determination, it was found that it has permitted modest changes in wage relativities which were generally in the right direction. To the extent that these changes were sufficient to equilibrate the labour market this probably reflects some important changes in the composition of the labour force and the high elasticity of supply from one industry to another.
34 citations
TL;DR: This paper examined the labour supply of married women in Australia using data from the 1974 Census of Population and Housing, and found that many of the factors proposed by modern theory do exercise significant influences in anticipated directions on the labor supply.
Abstract: ‘In a time when whales and seals are classified as endangered species, babies also seem to be an endangered species ˙˙˙ with so many mothers in the workforce our population growth has dropped below zero and I think the Federal government should counter that trend˙˙˙˙ Babies born in Australia are our best new Australians.’ (Senator Florence Bjelke-Petersen in a speech to the Women's Action Alliance, reported in the Canberra Times, 3 June 1981.)
The paper examines the labour supply of married women in Australia using data from the 1974 Census of Population and Housing. A number of approaches to modeling are employed. In the first instance OLS equations are estimated. These estimates are compared with instrumental variable estimates endogenizing wage rates. and with estimates from a three-equation system endogenizing fertility as well as wages. The evidence suggests that many of the factors proposed by modern theory do exercise significant influences in anticipated directions on the labour supply of married women in Australia.
33 citations
TL;DR: This article used time-series econometric methods to unravel the causes of the secular decline in the labour force participation rate of males aged 65 years and over, finding that most of the sharp and sudden decline in participation rate during 1972-76 is atria but able 10 more generous age pension benefits, with minor support from the discouraged worker effect associated with the current recession.
Abstract: This paper uses time-series econometric methods to unravel the causes of the secular decline in the labour force participation rate of males aged 65 years and over. The study finds that most of the sharp and sudden decline in the participation rate during 1972–76 is atria but able 10 more generous age pension benefits, with minor support from the discouraged worker effect associated with the current recession. A key feature of the model is the inclusion of several social security policy variables, apart from the value of the old-age pension. These policy variables include the ‘free area’ means test limit and the 1976 switch from a means to an income test.
30 citations
TL;DR: In this article, a model of mine production under uncertainty is presented, where the optimal tax is a single tax with two parts, i.e. a bonus bid and conditional tax payments based on the ex-post rent of the mine.
Abstract: Australian State governments have begun to increase royalty rates and other mineral taxes. The most instructive approach to taxation policy for the minerals sector is to set up a general model of mines which year the optimal structure of taxes. A model of mine production under uncertainty is presented. The optimal tax is a single tax with two parts. a bonus bid and conditional tax payments based on the ex-post rent of the mine. The actual structure of taxes levied by State and Commonwealth governments is seen to be distinctly sub-optimal in several respects. Proposals to move the actual to word the optimal structure are made, recognizing some of the constraints on information and the maximum acceptable rate of tax reform.
28 citations
TL;DR: The paper provides on illustration of the procedure used to interface the MACRO and ORANI modules of the IMPACT Project and the solution to the main interfacing problem is that of temporal aggregation.
Abstract: The paper provides on illustration of the procedure used to interface the MACRO and ORANI modules of the IMPACT Project. The main interfacing problem is that of temporal aggregation. This problem arises when information is to be passed between a dynamic disequilibrium model such as MACRO and a comparative static general equilibrium model such as ORANI. A diagrammatic treatment of the solution to this problem is presented. The procedure is then illustrated by a numerical experiment.
25 citations
TL;DR: In this article, the average completed duration of unemployment for several age and sex categories was estimated using a parametric technique, and it was shown that changes in the unemployment rate are dominated by changes in duration.
Abstract: Using a parametric technique. this paper estimates average completed duration of unemployment for several age and sex categories. It shows that the use of Labour Force Survey data leads to underestimates due to the presence of recurrent unemployment. When allowance is made, using A BS Persons Looking for Work and Labour Force Experience data, it is shown that new entrants to unemployment in 1981 could expect to remain unemployed for nearly six months. For teenagers evidence is presented to suggest that, contrary to current economic thought, teenagers may on average be unemployed for longer periods per spell and may have less experience of recurrent spells than their counterparts. It also shows that changes in the unemployment rate are dominated by changes in duration.
19 citations
TL;DR: In this paper, a model of tenure choice in the context of inflation and taxation is developed, and the model also establishes the regressive nature of the tax subsidy to owner-occupation.
Abstract: Judy Yates (1981) notes the regressive redistributive impact of home-mortgage interest rate regulation and offers some explanations. This paper provides an alternative explanation of Yates' observations in terms of the interaction of inflation with the current tax system in Australia. A model of tenure choice in the context of inflation and taxation is developed. In explaining this phenomenon, the model also establishes the regressive nature of the tax subsidy to owner-occupation. Home-mortgage interest rate regulation is then introduced. This reinforces the redistributive bias in the housing finance market. The model is used finally to predict the impact of deregulation. It is concluded that deregulation by itself can only remove redistributive bias resulting from regulated mortgage interest rates. Reform of the tax system is required to eliminate the regressive redistributive effects of the tax subsidy to owner-occupation.
19 citations
TL;DR: In this paper, the authors present empirical evidence for covered interest parity and speculative efficiency of the foreign exchange market, i.e., the unbiasedness of the forward rate as a predictor of the spot rate.
Abstract: Two key relationships which feature prominently through out modern international monetary theory are: (i) covered interest parity and(ii) speculative efficiency of the foreign exchange market, i.e., the unbiasedness of the forward rate as a predictor of the spot rate. This paper presents some empirical evidence for these two hypotheses using Australian data over the period September 1974 to December 1981 during which the Australian dollar was essentially floating. Both quarterly and overlapping monthly data are used. The results obtained generally provide some support for the two hypotheses.
18 citations
TL;DR: This paper found that a significant portion of fluctuations in the unemployment rate can be explained by real wage movements, and as well monetary policy through its effects on the real money supply also seems to affect unemployment.
Abstract: Many observers have attributed the high unemployment experienced in Australia in the 1970s to the rises in real wages which have occurred in the decade. An alternative or additional hypothesis is that unemployment has resulted from policy directed at controlling inflation and that this has been exacerbated by the occurrence of adverse external factors, particularly bul not solely the oil price shocks, which have made inflation more difficult than otherwise to control.
The results of econometric tests suggest that a significant portion of fluctuations in the unemployment rate can be explained by real wage movements, and as well monetary policy through its effects on the real money supply also seems to affect unemployment. Both real wage rises and monetary restrictions appear to have contributed to the jump in unemployment in 1974–75, and since then the continuing high and rising unemployment rate is closely associated with the low growth rate of the real money supply.
TL;DR: In this article, the authors developed and exposit the methodology underlying the computation of the long-run marginal costs of "base-load" electricity supply by a publicly owned utility, and the particular application is to the costing of power to be supplied by the State Electricity Commission of Victoria (SECV) to Alcoa's aluminum smelter at Portland in Victoria.
Abstract: The aim of this paper is to develop and exposit the methodology underlying the computation of the long-run marginal costs of ‘base-load’ electricity supply by a publicly owned utility. The particular application is to the costing of power to be supplied by the State Electricity Commission of Victoria (SECV) to Alcoa's aluminum smelter at Portland in Victoria. The results suggest a sizeable subsidy element in the tariff which is sensitive to the selection of the real discount rate appropriate for the public provision of electricity.
TL;DR: In this article, the authors test the srochastic implications of Hall's (1978) national expectation life-cycle consumption model using Australian data and show that the strong version of the hypothesis can only be rejected using lagged values of the change in the unemployment rate and a particular measure of disposable income.
Abstract: Using Australian data, this note tests the srochastic implications of Hall's (1978) national-expectations life-cycle consumption model. The strong version of the hypothesis can only be rejected using lagged values of the change in the unemployment rate and a particular measure of disposable income.
TL;DR: In this article, the authors present a model of the regulated firm in which such price-setting procedures provide an incentive to inflate costs above minimum levels, and the welfare cost of this form of regulation can then exceed that occurring at the unconstrained monopoly outcome.
Abstract: When entry into an industry is restricted, economic regulation of that industry is often directed at preventing existing firms from monopoly pricing behaviour. One form of such regulation is to set prices so as to control the level of profits earned by these firms. This paper briefly reviews the relevant economic literature and presents a model of the regulated firm in which such price-setting procedures provide an incentive to inflate costs above minimum levels. The welfare cost of this form of regulation can then exceed that occurring at the unconstrained monopoly outcome. The setting of air fares under the Two-Airline Policy and the regulation of natural gas in NSW are discussed in the context of this analysis.
TL;DR: Using data from the 1976 Australian Census of Population and Housing, estimates of the influence of family income on the school participation rate of various teenage groups are obtained as discussed by the authors, suggesting that family income is the most important determinant of school participation.
Abstract: Using data from the 1976 Australian Census of Population and Housing, estimates of the influence of family income. labour market conditions, religious denomination, foreign origin, locality and teenage income on the school participation rate of various teenage groups are obtained. These results suggest that family income is the most important determinant of school participation. The effect of the level of unemployment upon school participation is only modest. In some instances the direction of its influence is contrary to conventional wisdom.
TL;DR: The view that Australian protection discriminates against the less developed countries (LDCs) is examined in this article, which distinguishes between direct discrimination through tariff preferences and indirect discrimination through inter-commodity differences in rates of protection.
Abstract: The view that Australian protection discriminates against the less developed countries (LDCs) is examined in this paper. It distinguishes between direct discrimination through tariff preferences and indirect discrimination through inter-commodity differences in rates of protection. The second mechanism proves to be more important. While Australian protection did not discriminate against the LDCs in 1968–49, by 1977–78 it did. This reflects changes in the commodity composition of Australia's imports from the LDCS.
TL;DR: This paper examined the accuracy of economic forecasts in general and by examining a subset of 12 Australian forecasters over a five-year period and concluded that it is highly unlikely that a meaningful and stable ranking could be obtained.
Abstract: This paper looks at the accuracy of economic forecasts in general and by examining a subset of 12 Australian, forecasters over a five-year period. It also address the question of whether it is possible to rank forecasters in order of merit. The paper concludes that the problem are sufficiently large for it to be highly unlikely that a meaningful and stable ranking could be obtained.
TL;DR: In this paper, an empirical examination of the nature of factors influencing the utilization of credit cards in Australia is presented, where cross-section data from a 1980 survey are employed in an attempt to determine what individual characteristics increase the probabilities of holding cards and using extended credit facilities.
Abstract: This note is an empirical examination of the nature of factors influencing the utilization of credit cards in Australia. Cross-section data from a 1980 survey are employed in an attempt to determine what individual characteristics increase the probabilities of holding cards and using extended credit facilities. Aggregative time-series analysis seeks to explain the trends in Bankcard financing of various types of expenditure.
TL;DR: In this paper, the effect on investment of the introduction of uncertainty about the size of one parameter depends on what other parameters are simultaneously uncertain, and two parameters may be linked with positive or negative covariances.
Abstract: This article shows that the effect on investment of the introduction of uncertainty about the size of one parameter depends on what other parameters are simultaneously uncertain. Further, two parameters may be linked with positive or negative covariances. The covariances are here shown to have important effects on the investor, whether risk neutral or risk averse. Governments are advked to consider policies that affect the covariances of those parameters that are key influences on in vestment.
TL;DR: In this paper, it is argued that deregulation of housing interest rates would, under plausible assumptions, substantially increase the cost of housing finance in Australia, contrary to the impression created by the Australian Financial System Inquiry (the Campbell Report).
Abstract: It is argued that deregulation of housing interest rates would, under plausible assumptions, substantially increase the cost of housing finance in Australia, contrary to the impression created by the Final Report of the Australian Financial System Inquiry (the Campbell Report). Characteristics of the market for owner-occupier housing finance, on both the demand and supply sides, suggest that the deregulated market rate will be approximately equal to the uncontrolled rate under regulation. The weighted average interest rate for owner-occupier housing finance at December 1981 is more than three percentage points below the uncontrolled rate. The authors conclude that while this result does not of itself constitute an argument against deregulation, it does imply that deregulation would have a substantial distributional impact.
TL;DR: The authors concludes that budget deficits do not necessarily lead to high interest rates and that crowding out is only moderate even with non-accommodating monetary policy and that the major constraint on the effectiveness of expansionary fiscal policy is the need to avoid devaluation.
Abstract: After surveying objections to using expansionary fiscal policy to raise output and employment this article concludes that budget deficits do not necessarily lead to high interest rates and that crowding out is only moderate even with non-accommodating monetary policy The major constraint on the effectiveness of expansionary fiscal policy is the need to avoid devaluation If real wages are rigid downwards devaluation will lead to increases in inflationary pressure rather than increases in output Because of this and because of inflationary pressure from short-run Phillips curve effects expansionary fiscal policy must be complemented by a prices and incomes policy
TL;DR: The National Economic Summit can be viewed as a symptom of the extensive use of authority in the Australian economy and equally an expression of the limitations of what can be achieved with centralized authority.
Abstract: The National Economic Summit can be viewed as a symptom of the extensive use of authority in the Australian economy and equally an expression of the limitations of what can be achieved with centralized authority. An examination of the documentation left by the summit provides an opportunity to assess the implications of policy choices which use persuasion and authority rather than market disciplines.
TL;DR: This article found that the structural pressures of the early 70s had only a minor impact on the relative labour market performances of different birthplace groups in Australia, and the correlation between the measure applied to birthplace groups and various indicators of their labour market performance is found to be low.
Abstract: During the 1970s there were some marked shifts in the occupational composition of the Australian workforce. It is sometimes argued that these had a particularly adverse effect on migrants. However we conclude that the structural pressures of the early 70s had only a minor impact on the relative labour market performances of different birthplace groups in Australia. The analysis involves the construction of a measure of the incidence of the costs of structural change. The correlation between the measure applied to birthplace groups and various indicators of their labour market performances is found to be low.
TL;DR: In this article, the authors provided the estimates of the degree of progressivity (or regressivity) of the sales or excise tax on more than 300 individual consumption items based on the Australian Household Expenditure Survey 1975-7 6.
Abstract: The main contribution of this paper is to provide the estimates of the degree of progressivity (or regressivity) of the sales or excise tax on more than 300 individual consumption items. This is the first tax incidence study which considers such a fine classification of goods and services. The estimates based on the Australian Household Expenditure Survey 1975–7 6 provide a guideline for determining the tax rates on individual consumption items. Several interesting findings which emerge from the numerical results given in the paper suggest the usefulness of considering such a fine classification of goods and services.
TL;DR: In this paper, prima facie Australian statistical evidence is found which is consistent with this postulate and the lag in the association is identified and a model specified and estimated, and a post-sample validation period supports and strengthens the within-sample results.
Abstract: For an open economy the existence of internationally integrated goods and capital markets implies the country's monetary growth may be considerably influenced by fluctuations in international monetary circumstances. Theoretical literature exists which suggests US monetary growth may be catalytic in determining world monetary growth in general and the monetary growth of smaller. dependent economies in particular. In this paper, prima facie Australian statistical evidence is found which is consistent with this postulate. The lag in the association is identified and a model specified and estimated. A post‐sample validation period supports and strengthens the within‐sample results. Copyright
TL;DR: The authors analyzes the dynamic adjustments of a small, open economy faced with the certain prospect of a future export (resources) boom and analyzes how the adjustment occurs in three phases.
Abstract: This paper analyzes the dynamic adjustments of a small, open economy faced with the certain prospect of a future export (resources) boom. It is shown how the adjustment occurs in three phases. First, the initial expectation generates an immediate (discrete) appreciation of the exchange rate. Secondly, prior to the export boom, the exchange rate continues to appreciate gradually, while a dissimulation of bond holdings by domestic residents occurs, After the boom, the exchange rate gradually appreciates further while the balance of trade moves into surplus and domestic residents begin to accumulate bond holdings. These adjustments are rejected in the movement of the relative price of traded to non-traded goods and the implications of this for the structural adjustment of domestic industry are discussed.
TL;DR: In this paper, the authors consider how far this diagnosis was correct, what the new policies were, how the economy has fared in the light of these policies and the development of North Sea oil and why things turned out that way.
Abstract: Spokesmen for Ms Thatcher's government have repeatedly stated that the British economy was ‘the sick man of Europe’ in the years before 1979; a policy of demand management in pursuit of full employment had brought only temporary relief, whereas her government's firm policy aimed at a long-term cure. This article considers how far this diagnosis was correct, what the new policies were, how the economy has fared in the light of these policies and the development of North Sea oil and why things turned out that way. It concludes with a brief assessment of future prospects.
TL;DR: In this paper, the authors investigated the behavior of Marx's rate of profit for the period 1919 to 1981 and found that it exhibits a discernible trend movement over the period of observation.
Abstract: The purpose of this paper is to estimate and investigate the behaviour of Marx's rate of profit for the period 1919 to 1981. The components of this rate, viz. constant and variable capital which are consistently defined as stock variables, surplus value, organic composition of capital and rate of exploitation, are estimaed for two sub periods for the manufacturing and the corporate enterprises sectors respectively. The rate of profit does not exhibit a discernible trend movement over the period of observation. However, it is subject to pronounced pro-cyclical variations. A similar picture emerges for the organic composition of capital and the rate of exploitation. The results are critically evalualed.
TL;DR: In this article, the authors stress the idea that a model builder has more freedom to set up the process than a theoretician, for whom only one assignment of prices to excess demand is reasonable; for computational purposes, any assignment is acceptable.
Abstract: The theoretical literature on tâtonnement processes leads to the conclusion that convergence is guaranteed only urrder fairly restrictive assumptions. Recently, however, large competitive equilibrium models have been successfully solved using algorithms inspired by tâtonnement processes. This paper stresses the idea that a model builder has more freedom to set up the process than a theoretician, for whom only one assignment of prices to excess demand is reasonable; for computational purposes, any assignment is acceptable. The diagonal dominance criterion provides guidelines to set up such an assignment. It is used to show that even intractable examples of global instability can easily be solved. Copyright © 1983, Wiley Blackwell. All rights reserved