We construct a partial equilibrium model of a risk averse monopolist who faces an uninsurable uncertain foreign demand and a constant marginal cost, and makes an ex-ante production plan, committing ex-post to the ex-ante price. Optimal government intervention is considered when the good is only...

This paper examines the implications of terms of trade vulnerability for a perfectly competitive, small open economy with incomplete risk markets. Conditions are obtained for which an improvement in the mean terms of trade raises welfare and for which an increase in the variance of the terms of...

We estimate small open economy models with involuntary unemployment using Australian data from 1993 to 2007, focusing on hiring costs and real wage rigidity. We find a strong preference for models with hiring costs, which account for 0.97% of GDP. The data favour models with real over nominal...

We construct a dynamic error correction model of the Australian labor market using a macroeconomic panel across seven states from 1972:3 to 1999:1. Medium-run equilibrium estimates support a real wage-productivity gap and an unemployment gap. The dynamic short-run estimates support...

Panel unit root tests show that intranational purchasing power parity cannot be rejected across major Australian cities from 1972:3 to 1999:1. The persistence of deviations in response to shocks is low, as measured by the estimated exact half-life of between five and ten quarters. This is much...