We use the multi-sector and multi-country G-Cubed model to explore the potential role of three major shocks – to productivity, risk premia and US monetary policy – to explain the large movements in relative prices between 2002 and 2008. We find that productivity shocks were major drivers of...

This paper examines the macroeconomic experience of Australia from 1961/62 to 1988/89 focusing on the links between the fiscal deficit, private savings, private investment, the balance of payments and relative prices. Alternative theoretical hypotheses are considered in an attempt to explain the...

This paper develops a simulation model of the Australian housing market which incorporates many of the important features of housing. The use of an intertemporal framework allows us to examine the relationship between house prices, land prices, rental return on housing and investment in housing....

The sharemarket crash of October 1987 has raised the question of the effect of a change in share prices on real consumption expenditure. This paper examines this issue by examining the role of permanent income or wealth in explaining the behaviour of aggregate consumption expenditure in...

Investment plays an important role in influencing short-term aggregate demand and in determining the long-run growth potential of the economy. Despite the current debate concerning the potential problem of low investment, there have been few recent empirical studies of aggregate investment in...

This paper examines the role played in divergent macroeconomic policies in the major industrial economies in causing the large swings in asset prices and global trade imbalances experienced during the 1980s. Using the MSG2 model of the world economy, it is found that the observed and expected...