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Abstract

This paper examines the influences of the two largest developed economies, namely the US and the Euro area, on Australia as an exemplar of a small open economy. To do so, we specify and estimate a structural VAR with bilateral linkages between the two large economies, and allow shocks orginating there to affect the Australian economy. More specifically, we show the role of foreign demand shocks, the differential effects of US or European sourced inflation and interest rate shocks on the Australian economy, and the relative unimportance of these foreign shocks to variations in the value of the Australian currency.

Item Type:	Report (Discussion Paper)
Authors/Creators:	Dungey, M and Osborn, D and Raghavan, M
Keywords:	repec;VAR; open economy; Australia
Publisher:	University of Tasmania
Additional Information:	Copyright 2013 University of Tasmania
Item Statistics:	View statistics for this item

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