The paper gives an overview of recent work in the development of the RBII macroeconomic model, focussing on adjustments designed to reflect the post-deregulation financial environment. Changes to the RBII model have been made in two main areas. First, a clearing market for short-term funds has...

This paper investigates simple monetary policy rules using a theoretical model of a small open economy. The anlysis is intended to highlight two problems in policy formulation that are of particular importance to Australia: instability of the money demand function, and exposure of the economy to...

Economic theory offers two distinct approaches to the modelling of interest rates. At the microeconomic level, interest rates are modelled as an outcome of intertemporal optimisation by investors, so that real interest rates are determined entirely by the real variables that characterise risk....

This paper provides a theoretical analysis of monetary policy rules specified in terms of an interest rate instrument, in contrast to the usual assumption that the instrument is a monetary quantity. The analysis is presented using a neoclassical dynamic model. It begins by summarising some...

This paper reviews the performance of a selection of indicators that are in common use in analysing the business cycle. The analysis proceeds in two stages, looking first at relationships between major expenditure aggregates and GDP, and then looking at the extent to which partial indicators...

This paper reviews issues in the econometric modelling of monetary policy in the light of recent experience and research. Two main sets of issues are covered: first, the operation of policy including the specification of the instrument and objectives; and second, the transmission of monetary...

Assets with superannuation funds represented the fastest growing of the major components of household wealth during the 1980s. This paper reviews the causes of that growth, and its effects on private saving and on the pattern of financial intermediation. It is found that the growth of...

During the past two or three decades structural change in the Australian financial system has been rapid. The system has grown substantially in assets and volumes of activity, has become much more open and competitive, and has undergone some significant shifts in market shares. There has also...

This paper investigates the efficiency of Australian options markets using a version of the Black-Scholes model. Under the joint null hypothesis that the pricing model is valid, and that forecasts are efficient, the implied volatilities calculated from observed option prices should be efficient...

Australia is in the early stages of introducing a system of self-provision for retirement through mandatory contributions to private superannuation funds. For most employees, the scheme will eventually replace, either fully or partially, the government age pension, currently relied upon by a...