International transmissions to Australia: The Roles of the USA and Euro Area

Mardi Dungey, Denise Osborn, Mala Raghavan

    Research output: Contribution to journalArticle

    Abstract

    This paper examines the influences of the world's two largest developed economies, namely the USA 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 originating in either to affect the Australian economy. More specifically, we show the role of foreign output shocks, the differential effects of USA- or Euro-area-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.
    Original languageEnglish
    Pages (from-to)421-446
    JournalEconomic Record
    Volume90
    Issue number291
    DOIs
    Publication statusPublished - 2014

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