Most recent papers:

• A Mixed Frequency BVAR for the Australian Economy.
  Kelly Trinh, Jamie L. Cross.
  Economic Record. April 14, 2026
  ["Economic Record, EarlyView. ", "\nA mixed frequency vector autoregression (MFVAR) model is proposed for nowcasting, forecasting and backcasting Australian macroeconomic indicators at monthly and quarterly frequencies. A novel augmented Minnesota prior for MFVAR models is also introduced. This prior ensures that a priori regularisation applied to the autoregression coefficients in the MFVAR is equivalent to that of a VAR model estimated using the coarsest frequency data. The model provides monthly estimates of CPI and GDP from January 1991 to December 2023, which have historically been released only at a coarser quarterly frequency. In an in‐sample analysis, we demonstrate that these higher frequency indexes offer credible advantages over existing methods. The MFVAR also provides competitive point and density forecasts of four key macroeconomic indicators—CPI, GDP, the cash rate and the unemployment rate—compared to a quarterly VAR model, while also providing higher frequency monthly forecasts of all variables.\n"]

  April 14, 2026   doi: 10.1111/1475-4932.70045   open full text
• Promotion in the Australian Public Service: Improvements for Women and Stagnation for Cultural and Linguistic Minorities.
  Robert Breunig, David Hansell, Nu Nu Win.
  Economic Record. April 10, 2026
  ["Economic Record, EarlyView. ", "\nWe investigate whether being female, Indigenous, from a non‐English speaking background (NESB) or having a disability affects career advancement in the Australian Public Service. Over the past 20 years, women have become more likely to get promoted at senior ranks than similar men and just as likely at junior ranks. NESB staff have much lower promotion prospects at higher ranks despite being less likely to separate from the public service. Lower promotion prospects for NESB staff are only partially explained by language proficiency or cultural assimilation. The unexplained remainder could reflect tokenism or a penalty for being non‐white.\n"]

  April 10, 2026   doi: 10.1111/1475-4932.70047   open full text
• Examining the Macroeconomic Costs of Occupational Entry Regulations.
  Joel Bowman, Jonathan Hambur, Nathan Markovski.
  Economic Record. March 26, 2026
  ["Economic Record, EarlyView. ", "\nOccupational entry requirements (OER) are aimed at preventing public harm by ensuring minimum standards. But they can also make it harder for workers to enter occupations, reducing competition and hindering productivity growth. This paper fills an important gap, documenting the stringency of OER across three states of Australia and assessing their impact on economic dynamism. Consistent with overseas work, we find that OER are associated with less firm entry and slower reallocation of resources to productive firms. Bringing OER in line with low stringency OECD countries would appear to have a notable effect on dynamism in the occupation studies.\n"]

  March 26, 2026   doi: 10.1111/1475-4932.70044   open full text
• A Structural Model of Mortgage Offset Accounts in the Australian Housing Market.
  James Graham.
  Economic Record. March 17, 2026
  ["Economic Record, Volume 102, Issue 336, Page 3-26, March 2026. ", "\nI study a novel institutional feature of Australian housing markets: the widespread use of mortgage offset accounts. These accounts reduce mortgage interest costs and increase mortgage liquidity. I build a heterogeneous agent life‐cycle model of the Australian housing market to study who uses and benefits from these mortgage products. Households in middle age and with larger incomes, houses, and mortgages are most likely to use offset accounts and generally derive larger benefits from their use. I show that a social planner could maintain mortgage profitability, improve welfare for many households and more evenly distribute benefits by adjusting the price structure of offset accounts.\n"]

  March 17, 2026   doi: 10.1111/1475-4932.70007   open full text
• Geography of Growing Up: Mapping Childhood Location to Later Life Outcomes.
  Yun So.
  Economic Record. March 17, 2026
  ["Economic Record, Volume 102, Issue 336, Page 47-71, March 2026. ", "\nThis paper examines the causal effects of neighbourhood improvement during childhood (1996–2006) on tertiary educational attainment and adult income, using longitudinal census and administrative data from New Zealand. To address residential self‐selection, we restrict analysis to families who remained in the same location but experienced varying neighbourhood trajectories. Causal inference is implemented using Structural Nested Mean Models and Regression‐with‐Residuals, which adjust for time‐varying confounding while preserving causal pathways. Treatment is defined as an improvement of at least two deciles on the New Zealand Deprivation Index (NZDep). We study two cohorts: children from moderately deprived areas (NZDep 6) and those from more severely deprived areas (NZDep 7). Neighbourhood improvement substantially increases tertiary attainment in both groups: by 17.8 percentage points in NZDep 6 and 23.3 points in NZDep 7. The gains are particularly pronounced for Māori and Pasifika children, who experience improvements at least as large as, and in some cases exceeding, the overall average, underscoring the potential for neighbourhood upgrading to reduce ethnic inequalities in educational attainment. Treatment effects on adult earnings are 22.1% for NZDep 6 (not statistically significant) and 32.0% for NZDep 7 (marginally significant, P < 0.10). This gradient is consistent with stronger neighbourhood effects at higher levels of baseline deprivation. Sensitivity analysis indicates that the neighbourhood effects are robust to unobserved confounding. In the more deprived cohort (NZDep 7), tertiary education accounts for approximately one‐quarter of the earnings effect, highlighting education as a key mechanism. Overall, the findings provide credible evidence that childhood exposure to neighbourhood upgrading improves long‐run educational attainment and, more tentatively, adult income. The effects are largest in the most disadvantaged contexts, underscoring the potential of place‐based interventions to promote social mobility and reduce intergenerational inequality.\n"]

  March 17, 2026   doi: 10.1111/1475-4932.70017   open full text
• The Impact of Social Protection Expenditure on Poverty and Inequality in High‐ and Middle‐Income Countries.
  Shuhrat Yarashov, Nadezhda V. Baryshnikova, Jakhongir Kakhkharov.
  Economic Record. March 17, 2026
  ["Economic Record, Volume 102, Issue 336, Page 99-137, March 2026. ", "\nThis study evaluates the effectiveness of social protection spending in reducing poverty and inequality across high‐ and middle‐income economies, offering direct insights for policy‐makers aiming to enhance equity outcomes. Specifically, it examines how such expenditures influence three key indicators: the headcount poverty rate, the Gini coefficient and the income share of the lowest decile. Drawing on a panel dataset of 74 countries spanning 1991–2021, we employ panel econometric techniques (e.g. GMM, 2SLS and Quantile regression) to evaluate the impact of social spending. Our results indicate that in high‐income countries, increased social protection spending is strongly associated with reductions in both poverty and inequality. By contrast, although this type of spending in middle‐income countries similarly reduces poverty, it paradoxically appears to diminish the income share of the lowest earners. Further analysis suggests that the interplay of corruption and e‐governance practices underlies these divergent outcomes, highlighting the importance of resilient governance in enhancing the equity effects of social policies. These findings suggest that effective public policies, especially with regard to income redistribution, should integrate anti‐corruption measures and e‐governance improvements alongside social protection spending to achieve sustained poverty reduction and equitable growth.\n"]

  March 17, 2026   doi: 10.1111/1475-4932.70024   open full text
• Centrality of Government to Innovation in Australia: A Social Networking Analysis.
  Sasan Bakhtiari.
  Economic Record. March 17, 2026
  ["Economic Record, Volume 102, Issue 336, Page 72-98, March 2026. ", "\nUsing a social networking approach, this study explores how government innovation collaborations, or lack thereof, might be behind the tepid productivity and innovation performance of Australian businesses. I use patent data to construct the network. The government has been very central to this network. However, since 2000, the centrality of government has declined. Using exponential random graph models, I can show that the drop in government centrality is primarily due to a narrowing down of government's focus to a smaller set of technologies and a drop in business collaborations, somewhat balanced by increasing foreign collaborations. This shift appears to be associated with changes in business innovation in Australia, where I detect a drop in the scope of patents lodged by businesses in tandem with declining government centrality. The lessons learned have important implications for policies aimed at enhancing basic innovation and promoting long‐term productivity growth.\n"]

  March 17, 2026   doi: 10.1111/1475-4932.70020   open full text
• Fuel Prices and Ambient Air Pollution: A Study of Sydney.
  Paul J. Burke, Jian Li.
  Economic Record. March 17, 2026
  ["Economic Record, Volume 102, Issue 336, Page 27-46, March 2026. ", "\nThis paper explores the short‐run influence of road transport fuel prices on ambient air pollution over the period 2004–2023 for the case of Sydney, Australia. Using daily data from nine air quality monitoring stations, we find negative effects of fuel prices on ambient concentrations of several key pollutants including ozone, nitrogen dioxide and carbon monoxide, with inelastic effect sizes. Consistently significant effects are not found for sulphur dioxide or visibility impairment levels. Wind speeds, bushfire incidence and public holidays are found to be among other key factors affecting air conditions. We also explore monthly effects and the links between gasoline prices and Google relative search interest in air pollution and related terms. The findings are useful for air pollution prediction and add to understanding of the environmental benefits of fuel taxes.\n"]

  March 17, 2026   doi: 10.1111/1475-4932.70013   open full text
• Does Decreasing the Generosity of Payments to Single Parents Have Employment and Earnings Effects? Evidence from Australian Administrative Data.
  Kristen Sobeck, Robert Breunig.
  Economic Record. February 23, 2026
  ["Economic Record, EarlyView. ", "\nWe examine the impact of two changes to Australia's Parenting Payment Single (PPS) program, a welfare payment for low‐income single mothers. One change lowered the age of the youngest child cut off for program eligibility, forcing new welfare entrants onto the less generous Newstart (unemployment) payment. A second change increased job search requirements for those on PPS. We use a difference‐in‐difference strategy which exploits the rule changes combined with an unannounced end to grandfathering provisions to disentangle the two effects. We find little effect of the increased job search requirements. The decreased generosity of the program has a small negative impact on single mothers' employment rate and it produces a large decrease in the share of single mothers who rely on welfare. Around 35 per cent of single mothers who ever received PPS between 2011 and 2016 eliminated their use of welfare. Due to the decreased generosity of the welfare payments received by the majority of single mothers who remained on income support, single mothers had lower incomes, on average, after the policy changes.\n"]

  February 23, 2026   doi: 10.1111/1475-4932.70039   open full text
• Retirement Savings Incentives for Low‐ and Middle‐Income Individuals: Does Government Funded Matching Change Behaviour?
  Kristen Sobeck, Robert Breunig.
  Economic Record. February 17, 2026
  ["Economic Record, EarlyView. ", "\nWe evaluate a government‐funded matching policy for retirement savings contributions targeted at low‐ and middle‐income individuals. Using a difference‐in‐difference approach, we exploit administrative changes to the Australian Government's retirement contribution matching (co‐contribution) policy to identify the impact of the programme on savings behaviour. A reduction in the income eligibility threshold led to a 0.9 percentage point decline in the share of individuals who made a contribution and a 6.3 per cent decrease in the value of retirement contributions. Conditional on making a non‐concessional (post‐tax) contribution prior to the change in eligibility rules, the average value of individual contributions declined by between 16 and 22 per cent.\n"]

  February 17, 2026   doi: 10.1111/1475-4932.70032   open full text
• Reducing Humanitarian Migrants' Welfare Dependency through Language Support: Evidence from Australia's Adult Migrant English Program.
  Bowen Wang, Tunye Qiu.
  Economic Record. February 11, 2026
  ["Economic Record, EarlyView. ", "\nHumanitarian migrants are among the most vulnerable migrant groups, often facing significant integration challenges, particularly language barriers. In response, many developed countries have introduced language programs to support their settlement. This study uses an event study (staggered difference‐in‐differences) approach and data from Australia's Longitudinal Study of Humanitarian Migrants to evaluate the impact of the Adult Migrant English Program (AMEP). Findings show that AMEP participation leads to an average 17.9 per cent reduction in welfare dependency across three post‐treatment periods. A heterogeneity analysis reveals variation in outcomes by gender, geographic location, and pre‐arrival education. These results have important implications for integration policy and fiscal planning in welfare states, challenging the notion that only high‐skilled migrants can achieve economic self‐sufficiency. With targeted support, humanitarian migrants can also reduce their dependence on government assistance, highlighting the value of inclusive, skills‐based settlement programs.\n"]

  February 11, 2026   doi: 10.1111/1475-4932.70034   open full text
• What has Australian Macroeconomic Thought Achieved in the Past Century – and Where Can it Contribute in the Next?
  Andrew Hauser, Jonathan Hambur.
  Economic Record. October 18, 2025
  ["Economic Record, EarlyView. ", "\nThe article is a reproduction of a speech to mark the centenary of the Economics Society of Australia at the Australian Conference of Economists given in Sydney on 9 July 2025.\n"]

  October 18, 2025   doi: 10.1111/1475-4932.70016   open full text
• The Times They Are A‐Changin': On the Ephemeral Nature of Music Polls.
  Liam J. A. Lenten, Jordi McKenzie.
  Economic Record. October 02, 2017
  This study examines voting results of two distinct but related long‐running music polls conducted by Australia's public‐owned youth radio station, Triple J, known as the Hottest 100. We document a number of stylised patterns displayed in the data related to song survival, rank ordering, movements, entry age and exit age across the five all‐time Hottest 100 instalments. We also use the annual Hottest 100 data to provide empirical evidence that the radio station itself played a significant role in results of the 20‐year poll via the annual release of CDs featuring subsets of songs from each year's annual poll (1993–2012).

  October 02, 2017   doi: 10.1111/1475-4932.12370   open full text
• Secular Stagnation: Determinants and Consequences for Australia.
  Grace Taylor, Rod Tyers.
  Economic Record. September 07, 2017
  Slack OECD economic performance and weaker macroeconomic policy support Summers's reuse of the phrase ‘secular stagnation’. Globalisation has redirected growth towards emerging economies, and anticipated rates of return on investment are impaired by perceived risk, institutionalised risk aversion, ageing and dependency, declining commitments to public investment and research and development with rising shares directed to health, retained trade distortions, industrial concentration and slower human capital accumulation, not to mention unexpected global abundance of fossil fuels and a slower Chinese economy. The information and literature supporting these concerns is reviewed and implications for global and Australian policy are inferred.

  September 07, 2017   doi: 10.1111/1475-4932.12357   open full text
• The Tyranny of Distance and the Gravity of Resources.
  Peter E. Robertson, Marie‐Claire Robitaille.
  Economic Record. August 30, 2017
  To what extent does geography remain an important determinant of comparative advantage and factor incomes in resource markets? We estimate gravity models for resources and find that some minerals and fuels, particularly iron ore and gas, do have very high elasticities of trade with respect to distance. To assess the implications of this we then consider a simple counterfactual where location advantages are eliminated. We find that for a few countries, including Australia and New Zealand, distance barriers have a large impact of their market share.

  August 30, 2017   doi: 10.1111/1475-4932.12368   open full text
• The ‘Flock’ Phenomenon of the Sydney Lockout Laws: Dual Effects on Rental Prices.
  Georgia Perks, Shiko Maruyama.
  Economic Record. August 24, 2017
  Geographically targeted crime control is a controversial attempt to alleviate crime, which risks the displacement of crime into neighbouring areas. The 2014 Sydney lockout laws have decreased the nightlife economy and violence in the entertainment districts, having displaced them into neighbouring areas. We investigate the effect of the Sydney lockout laws on rental prices in the displacement areas, and find a relatively weak and short‐lived negative effect on small dwellings and a persistent positive effect on large dwellings. Our results indicate the long‐term positive effect of the lockout laws on the land value of surrounding areas, despite reported crime displacement.

  August 24, 2017   doi: 10.1111/1475-4932.12358   open full text
• What Happens to Students with Low Reading Proficiency at 15? Evidence from Australia.
  Cain Polidano, Chris Ryan.
  Economic Record. August 22, 2017
  While illiterate adults are disadvantaged in the labour market, it is unclear whether low reading proficiency in school diminishes employment prospects in adulthood. We fill this gap using data on participants in the 2003 Program of International Student Assessment who were tracked to age 25 in the Longitudinal Survey of Australian Youth. We find no difference in full‐time employment rates or earning capacity of jobs attained at age 25 associated with low reading proficiency at 15. Those with low reading proficiency are found to avoid negative effects through high rates of participation and positive outcomes from vocational education and training.

  August 22, 2017   doi: 10.1111/1475-4932.12367   open full text
• Evaluating the Effectiveness of School Funding and Targeting Different Measures of Student Disadvantage: Evidence from New Zealand.
  Jeremy Clark, Susmita Roy Das, Andrea Menclova.
  Economic Record. June 15, 2017
  Many education funding policies seek to lessen the effect of economic disparities outside schools on the disparity of student outcomes within them. A national program for New Zealand schools provides an opportunity to evaluate the effectiveness of government funding in raising graduation rates, and of targeting alternative disadvantage measures. New Zealand targets five deprivation measures: low income, lack of education, low skill employment, crowding, and receiving welfare. Using school fixed effects, we do not find evidence that government funds raise graduation rates for schools, including those serving the most disadvantaged students. We also find no robust evidence that targeting some disadvantage measures is more effective than others. Single parent and rural/urban status are also found to co‐vary significantly with graduation rates.

  June 15, 2017   doi: 10.1111/1475-4932.12354   open full text
• Identification of Small Open Economy SVARs via Markov‐Switching Heteroskedasticity.
  Guido Turnip.
  Economic Record. June 14, 2017
  Various identifying restrictions commonly used in small open economy structural vector autoregression (SVAR) models are tested against an SVAR model identified via Markov‐switching heteroskedasticity. The SVARs are estimated for three small open economies, Australia, Canada and New Zealand. The most supported model is the one that allows for simultaneity between monetary policy and the real exchange rate without restricting the long‐run response of the real exchange rate to a monetary policy shock. The impulse responses to a monetary policy shock and an exchange rate shock identified from such model are consistent with theoretical predictions.

  June 14, 2017   doi: 10.1111/1475-4932.12345   open full text
• Measuring Economic Uncertainty and Its Effects.
  Angus Moore.
  Economic Record. June 09, 2017
  I construct a monthly index of economic uncertainty for Australia. Economic uncertainty rose to historically high levels during the financial crisis and remained elevated until late 2013. The index is: higher around recessions, elections, monetary policy surprises and some major events; tends to increase faster than it decreases; and is driven by both domestic and foreign factors. I use the index to assess how uncertainty affects the Australian economy. Consistent with the ‘real options’ channel of uncertainty, I find that it reduces investment and employment growth. Similarly, uncertainty raises the household saving ratio, consistent with the ‘precautionary savings’ channel.

  June 09, 2017   doi: 10.1111/1475-4932.12356   open full text
• Self‐employment Dynamics in Australia and the Importance of State Dependence.
  Darcy Fitzpatrick.
  Economic Record. May 30, 2017
  Using Australian labour force data, both cross‐sectional and longitudinal, this study examines the dynamics of self‐employment with a particular focus on workers transitioning between self‐employment and salaried employment, and the extent to which self‐employment is the result of workers’ observed and unobserved characteristics or is instead determined by their prior employment experience itself. Probability models of self‐employment using both pooled‐panel probit and dynamic random‐effects panel probit methods are estimated, and the results are found to be extremely sensitive to the differences in the econometric methods. Once unobserved heterogeneity and initial conditions are controlled for in the dynamic model, the importance of observed characteristics in determining self‐employment is greatly diminished. Instead, workers’ past experience in self‐employment (as opposed to salaried employment) is found to have a large favourable effect on their future self‐employment prospects. The influence of this state dependence is also considerably more important in determining self‐employment outcomes than salaried ones. Despite establishing the importance of state dependence, however, what this effect implies about why individuals choose to become self‐employed or the role that self‐employment plays in the labour market remains unresolved.

  May 30, 2017   doi: 10.1111/1475-4932.12337   open full text
• Labour Migration, Food Expenditure, and Household Food Security in Eastern Indonesia.
  Alfiah Hasanah, Silvia Mendolia, Oleg Yerokhin.
  Economic Record. May 24, 2017
  This paper investigates the impact of migration on the food expenditure and household food security status of migrant‐sending households using data from eastern Indonesia. We find that migration significantly increases food expenditure and overall household expenditure. Combining the food frequency and food consumption module of the Indonesia Family Life Survey (East), this paper shows that having at least one migrant in the family increases the composite index of Food Consumption Score, as well as the family's food security. Evaluation of food diversity also shows that migration increases expenditure on six out of ten food groups.

  May 24, 2017   doi: 10.1111/1475-4932.12344   open full text
• The Impact of the GFC on Sectoral Market Efficiency: Non‐linear Testing for the Case of Australia.
  Neha Deo, Heath Spong, Maria Estela Varua.
  Economic Record. May 23, 2017
  This paper investigates the efficiency of the Australian stock market during the period of volatility and disruption associated with the Global Financial Crises (GFC). Furthermore, the investigation seeks to observe any divergence in market efficiency between industry sectors that demonstrate differing economic performance across the period. Spanning a time period of 2000–2015, the data are split into three periods of distinct economic conditions: a pre‐crisis period of relatively high growth, the GFC period of disruption and contraction, and a post‐GFC period of relatively low growth. Five sector indices listed on the Australian Securities Exchange are analysed to search for evidence of market efficiency (Real Estate, Consumer Discretionary, Financials, Materials, and Metals and Mining). A range of non‐linear tests are applied in order to systematically investigate the structure of the market in each sector. The results highlight the cointegrated nature of non‐linearity across related sectors, and also demonstrate that different industries within the same economy can reveal highly diverse patterns of non‐linearity and market efficiency in response to financial crisis.

  May 23, 2017   doi: 10.1111/1475-4932.12343   open full text
• Identifying Social Network Effects.
  Peter Dolton.
  Economic Record. May 22, 2017
  This paper reviews the current state of empirical econometric identification in the economics of networks. Possible identification strategies which exploit the properties and characteristics of networks are described. The main arguments are illustrated with examples from the US AddHealth data and an account of the Bloomsbury Group network. Prescriptive suggestions, based on the way in which networks actually form and operate, are made for a more considered approach to empirical econometric work which involves networks.

  May 22, 2017   doi: 10.1111/1475-4932.12339   open full text
• An Analysis of the Impact of Health on Occupation.
  Joanne Flavel.
  Economic Record. May 18, 2017
  Maintaining individuals with health limitations in the labour force is a challenge of growing importance. Determining the effect of health on occupation may tell us how people adapt to their limitations, and what types of jobs make this harder or easier. This paper uses the first 14 waves of the Household, Income and Labour Dynamics in Australia Survey to examine the effect of health and changes in health on occupation for the working‐age population. I use dynamic panel models which account for selection into employment. Two measures of occupation are used to capture two aspects of occupation highlighted in the literature as being linked to health: physical job demands and status. The results of the analyses provide some evidence that a health shock reduces the likelihood of manual employment for younger men, suggesting that younger men may adapt to a health shock by reducing physical job demands. Worsening health and work‐limiting long‐term conditions are found to have a negative effect on occupational status for men and women, suggesting health selection into lower‐status jobs, and an adverse effect of poor health on occupational mobility.

  May 18, 2017   doi: 10.1111/1475-4932.12338   open full text
• The Economy‐wide Impacts of a Rise in the Capital Adequacy Ratios of Australian Banks.
  James A. Giesecke, Peter B. Dixon, Maureen T. Rimmer.
  Economic Record. May 18, 2017
  Regulators are requiring banks to raise additional equity to finance their activities. The benefits are understood in terms of reducing the risks of another financial crisis. But there are potential costs, including the potential for unanticipated macroeconomic impacts as banks reduce leverage. We use a financial computable general equilibrium model, containing disaggregated treatment of financial agents, to explore the economy‐wide consequences of an increase in bank capital adequacy ratios. We find that the macroeconomic consequences are small.

  May 18, 2017   doi: 10.1111/1475-4932.12341   open full text
• How Do People Design a Mechanism? Experimental Evidence.
  Hugh Sibly, John Tisdell, Shane Evans.
  Economic Record. May 05, 2017
  We use an economic experiment to identify how people design a mechanism. Our experimental framework is adapted from the market framework utilised by Maskin and Riley, who considered a monopolist seller of a homogeneous good that uses non‐linear pricing under incomplete information. Approximately 30 per cent of participants’ offers in each treatment were incentive‐compatible (separating) double offers, a requirement of the optimal mechanism. A similar percentage of offers in each treatment were single (non‐separating) offers, which do not require participants to address incentive compatibility. After sufficient rounds, the design of double offers converged to the schedule identified by Maskin and Riley, while the design of single offers converged to the optimal non‐separating (single) offer.

  May 05, 2017   doi: 10.1111/1475-4932.12336   open full text
• Public–Private Sector Wage Differentials in Australia.
  Stephane Mahuteau, Kostas Mavromaras, Sue Richardson, Rong Zhu.
  Economic Record. May 02, 2017
  This paper examines public–private sector wage differentials in Australia. After controlling for observed characteristics and individual fixed effects, we show that on average workers in the public sector earn about 5.1 per cent more in hourly wages than those in the private sector. The wage premium is slightly higher for females than males. Using a panel data quantile regression model with fixed effects, we show that the positive wage effects of public sector employment are heterogeneous, with comparatively larger impact at the lower end of the wage distribution than at other parts. We also find evidence of heterogeneity in the public sector wage premiums by qualification, time period, occupation and state/territory.

  May 02, 2017   doi: 10.1111/1475-4932.12334   open full text
• Health Insurance and Children in Low‐ and Middle‐income Countries: A Review.
  Sophie Mitra, Michael Palmer, Shannon Pullaro, Daniel Mont, Nora Groce.
  Economic Record. April 26, 2017
  We conduct the first systematic review of the impact of health insurance on children and their households in low‐ and middle‐income countries where nine‐tenths of the world's child population reside. We find only 13 studies for seven countries published between 2000 and 2014 which assess the insurance impacts for children, controlling for self‐selection and heterogeneity. Nine out of 10 studies reviewed provide consistent evidence that health insurance provides financial protection. The results are more mixed for health utilisation and health outcomes. Policy‐makers would benefit from additional research on whether and how health insurance benefits children.

  April 26, 2017   doi: 10.1111/1475-4932.12331   open full text
• Paternalism and Ethnicity in Giving.
  Kristy Jones.
  Economic Record. April 24, 2017
  This paper investigates paternalism and ethnicity in giving. In this experiment donors choose to donate to one of three recipient types, varying by ethnicity. In one treatment, donors can impose a costly restriction on their donation. I find a higher proportion of donors choose to donate to a commonly negatively stereotyped recipient (Indigenous Australians) when they are able to act paternalistically. Even when paternalism is costly, almost 60 per cent chose to restrict their donation. Paternalism is also found to be related to recipient type. The results indicate that to increase donations, charities may need to reduce donors’ perceptions of misuse.

  April 24, 2017   doi: 10.1111/1475-4932.12335   open full text
• The Dynamics of Informal Care Provision in an Australian Household Panel Survey: Previous Work Characteristics and Future Care Provision.
  Ha Trong Nguyen, Luke B. Connelly.
  Economic Record. April 20, 2017
  This study contributes to a small literature on the dynamics of informal care by examining the informal care provision choices of working‐age Australians. We focus on the impact of previous work characteristics (including work security and flexibility) on subsequent care provision decisions and distinguish between care that is provided to people who cohabit and people who reside elsewhere, as well as between the provision of care as the primary caregiver and provision in a secondary caring role. Our dynamic framework of informal care provision accounts for state dependence, unobserved heterogeneity and initial conditions. For both males and females, we find the existence of positive state dependence in all care states in both the short and medium term. Furthermore, the inertia in care provision appears to be stronger for more intensive care. We also find previous employment status has a significant deterrent effect on current care provision decisions. The effects on employment, however, differ according to the type of previous work, the type of care currently provided, and the gender of the caregiver. We also find that workers with perceptions of greater job security are nevertheless less likely to provide subsequent care. Our results suggest that workers’ perceptions about work flexibility and their stated overall satisfaction with work actually have no impact on their subsequent decisions to provide care in any capacity.

  April 20, 2017   doi: 10.1111/1475-4932.12333   open full text
• The Impact of Pharmaceutical Innovation on Premature Mortality, Hospital Separations, and Cancer Survival in Australia.
  Frank R. Lichtenberg.
  Economic Record. April 17, 2017
  I analyse the effect that pharmaceutical innovation had on premature (before age 75 and 80) mortality from all diseases in Australia during the period 1998–2011 by investigating whether the diseases that experienced more pharmaceutical innovation had larger declines in premature mortality. My estimates indicate that 60 per cent of the 1998–2011 decline in premature (before age 75) mortality was due to previous pharmaceutical innovation. They also indicate that previous pharmaceutical innovation accounted for 40 per cent of the 1986–2007 increase (from 49.0 per cent to 61.6 per cent) in the 5‐year relative cancer survival rate, controlling for mean age at diagnosis and the number of patients diagnosed, and that if no new drugs had been introduced during 1986–1999, the number of hospital separations in 2011 would have been about 13 per cent higher, ceteris paribus. My estimates indicate that new drugs listed on the Pharmaceutical Benefits Scheme during 1989–2002 reduced the number of life‐years lost from all diseases before ages 75 and 80 in 2011 by 143,639 and 257,602, respectively, and that the innovation was cost‐saving: the reduction in hospital expenditure attributable to it exceeded expenditure on the drugs. Even if it completely ignores the apparent reduction in hospital expenditure, the evidence indicates that pharmaceutical innovation was highly cost‐effective.

  April 17, 2017   doi: 10.1111/1475-4932.12332   open full text
• The Quality of Intermediate Goods: Growth and Welfare Implications.
  Yi‐Ling Cheng, Juin‐Jen Chang.
  Economic Record. March 27, 2017
  This paper explores the implications of the quality of intermediate goods in an endogenous growth model. We show that a trade‐off exists between the quality and the variety of products, which creates a wedge between the market‐equilibrium quality and the socially optimal quality. Relative to the social optimum, the equilibrium quality could be either under‐supplied or over‐supplied, depending on the productivity‐enhancing effect as well as the increasing returns to production specialisation and business‐stealing effects.

  March 27, 2017   doi: 10.1111/1475-4932.12329   open full text
• Light Rail, Land Values and Taxes.
  Cameron K. Murray.
  Economic Record. March 27, 2017
  Land value gains attributable to the light rail system in Gold Coast, Australia, are estimated. Using a panel of statutory land valuations, a model of location‐specific gains allowing for price effects at multiple distances from stations across time is estimated. Total value gains to nearby landowners are in the range $240–$314 million, around a quarter of the project's capital cost. Scope to fund transport investment from value gains is apparent, and the city council and the state government have the administrative structures to recoup funds from benefiting landowners. Exemptions and budgeting practices mean little is recouped in practice.

  March 27, 2017   doi: 10.1111/1475-4932.12330   open full text
• The Relationship between Immigration to Australia and the Labour Market Outcomes of Australian‐Born Workers.
  Robert Breunig, Nathan Deutscher, Hang Thi To.
  Economic Record. March 10, 2017
  We examine the relationship between immigration to Australia and the labour market outcomes of Australian‐born workers. We use immigrant supply changes in skill groups, defined by education and experience, to identify the impact of immigration on the labour market. We find that immigration flows into those skill groups that have the highest earnings and lowest unemployment. Once we control for the impact of experience and education on labour market outcomes, we find almost no evidence that immigration harms the labour market outcomes of those born in Australia.

  March 10, 2017   doi: 10.1111/1475-4932.12328   open full text
• Designing Biosecurity Inspection Regimes to Account for Stakeholder Incentives: An Inspection Game Approach.
  Anthony Rossiter, Susan M Hester.
  Economic Record. February 23, 2017
  We investigate the potential for biosecurity regulators to design inspection regimes that reduce intervention and encourage importers to decrease the likelihood of biosecurity risk material being present in consignments. The interaction between a biosecurity regulator and a vertically integrated importer is framed as an inspection game. Our principal focus is a dynamic version of the game, which we use to assess whether regimes based on past compliance can encourage behaviours consistent with the regulatory objective. Our results suggest appropriate candidates for compliance‐based inspection regimes are goods where there is access to cost‐effective ‘fixed’ abatement technologies, and those with high costs associated with being inspected or failing inspection.

  February 23, 2017   doi: 10.1111/1475-4932.12315   open full text
• Local Labour Markets and Unemployment Duration.
  Matthew Forbes, Andrew Barker.
  Economic Record. February 13, 2017
  This paper explores the relationship between local unemployment rates and the length of time people who have lost their job spend unemployed, using a competing risks model. High local unemployment is found to reduce the probability of re‐employment for someone who was employed prior to a period of unemployment. However, individual factors such as age, education and experience are more important predictors of re‐employment. This suggests there could be benefits from a policy response that focuses more on the individuals, and building skills that are resilient to structural change, than on job creation in local areas.

  February 13, 2017   doi: 10.1111/1475-4932.12318   open full text
• Understanding the Non‐Market Value and Equity Implications of the Walsh Bay Arts Precinct Redevelopment.
  Mark Morrison, Christine M Hill.
  Economic Record. February 10, 2017
  Few studies have sought to identify willingness to pay for arts precincts. However, given the subsidies required for developing such precincts, understanding non‐market benefits is important for their justification. Using contingent valuation, we identify community willingness to pay for the redevelopment of the Walsh Bay Arts Precinct in Sydney, Australia. We explore equity implications by examining the distribution of values across regions and attitudinal segments. We find that willingness to pay is not solely the domain of relatively wealthy inner‐city households. More distant respondents had a positive and substantive willingness to pay, as did respondents from several attitudinal segments.

  February 10, 2017   doi: 10.1111/1475-4932.12317   open full text
• The Impact of Child Support on the Household Income and Labour Supply of Payee Lone Mothers.
  Hayley Fisher.
  Economic Record. February 08, 2017
  One objective of child support schemes is to reduce the reliance of lone parents on government transfers. I estimate the effect of receiving child support on the household income and labour market activity of payee lone mothers in Australia. I use variation in the amount of child support received driven by the employment status of the paying parent, and find that receiving any child support reduces government transfers, increases labour force participation, and increases household income in excess of the amount of child support received. Increasing the amount of child support received does not decrease the employment rate or hours worked of lone mothers.

  February 08, 2017   doi: 10.1111/1475-4932.12314   open full text
• The Role of Prices in Welfare Comparisons: Methodological Developments and a Selective Survey of the Empirical Literature.
  Ranjan Ray.
  Economic Record. February 01, 2017
  Prices play a central role in a wide range of applications in economics, ranging from macro topics such as inflation targeting, purchasing power parity between currencies, global poverty and real Gross Domestic Product (GDP) comparisons to micro topics such as inequality and poverty at household level and the distributive effects of price movements. The literature on price measurement has also impacted on, and been impacted by, developments in the demographic demand literature based on the treatment of household composition as analogous to prices. While there is now a sizeable statistical literature on price measurement, there is hardly any survey of the empirical economics literature where prices play a central role in the analysis. This paper attempts to address this gap and provides a survey of the methodological developments in price measurement followed by a selected review of their empirical applications.

  February 01, 2017   doi: 10.1111/1475-4932.12313   open full text
• Income Inequality, TFP, and Human Capital.
  Tiago Neves Sequeira, Marcelo Santos, Alexandra Ferreira‐Lopes.
  Economic Record. January 16, 2017
  A fruitful recent theoretical literature has related human capital and technological development to income (and wage) inequality. However, empirical assessments on the relationship are relatively scarce. We relate human capital, total factor productivity (TFP) and openness to inequality and discover that, when countries are assumed to be heterogeneous and dependent cross‐sections, human capital is the most robust determinant of inequality, contributing to increasing inequality, as predicted by theory. TFP and openness turned out to be non‐significantly related to inequality. These results are robust to a number of robustness tests on specifications and data and open up the prospect of theoretical research on the country‐specific features conditioning the effect of human capital, technology and trade on inequality.

  January 16, 2017   doi: 10.1111/1475-4932.12316   open full text
• Time‐Varying Trend Inflation and the New Keynesian Phillips Curve in Australia.
  Denny Lie, Anirudh S. Yadav.
  Economic Record. January 05, 2017
  This paper investigates whether the persistence and the time‐varying nature of trend inflation can explain the persistence of inflation in Australia — that is, whether it can explain the apparent need for backward‐looking inflation term(s) in the new Keynesian Phillips curve (NKPC) estimated using Australian data. We derive and estimate an extended open‐economy NKPC equation, accounting explicitly for time‐varying trend inflation. Our preferred, best‐fitting estimates based on the closed‐form specification with two indexation lags indicate a significant degree of indexation to past inflation. Thus, in contrast to the result for the US economy, our estimates suggest that accounting for time variation in trend inflation in the NKPC cannot explain away the inertia in the Australian inflation data. The estimates suggest that lagged inflation and future expectations of inflation enter the NKPC with almost equal weights. Finally, notwithstanding the previous results, we find a marked decline in the role of the backward‐looking inflation terms since the adoption of an inflation‐targeting regime by the Reserve Bank in 1993.

  January 05, 2017   doi: 10.1111/1475-4932.12312   open full text
• Paid Parental Leave and Child Health in Australia.
  Barbara Broadway, Guyonne Kalb, Daniel Kuehnle, Miriam Maeder.
  Economic Record. January 05, 2017
  Providing mothers with access to paid parental leave may be an important public policy to improve child and maternal health. Using extensive information from the Longitudinal Study of Australian Children, we estimate how paid parental leave entitlements influence children's health up to age 7. Exploiting detailed information on children's health, family background, mothers’ pre‐birth work histories and mothers’ health behaviours during pregnancy, we show that paid parental leave entitlements go together with a reduced probability of a child having multiple ongoing health conditions, but show no significant correlation with any single condition. We find that the reduction in multiple conditions is strongest for children from lower socioeconomic backgrounds. Our study implies that the provision of paid parental leave for short periods is unlikely to substantially improve child health on average, but may potentially benefit the health of more disadvantaged children.

  January 05, 2017   doi: 10.1111/1475-4932.12311   open full text
• Surfing through the GFC: Systemic Risk in Australia.
  Mardi Dungey, Marius Matei, Matteo Luciani, David Veredas.
  Economic Record. December 21, 2016
  We provide empirical evidence on the degree of systemic risk in Australia before, during and after the global financial crisis. We calculate a daily index of systemic risk from 2004 to 2013 in order to understand how real economy firms influence the outcomes for the rest of the economy. This is done via a mapping of the interconnectedness of the financial and non‐financial sectors. The financial sector is in general home to the most consistently systemically risky firms in the economy. The materials sector occasionally becomes as systemically risky as the financial sector, reflecting the importance of understanding these linkages.

  December 21, 2016   doi: 10.1111/1475-4932.12309   open full text
• Microfinance and Ethnic Diversity.
  Sefa Awaworyi Churchill.
  Economic Record. December 15, 2016
  We argue that understanding why the levels of success vary across microfinance institutions (MFIs) requires not only an understanding of the interplay between MFIs, MFI‐specific practices and macroeconomic factors, but also what role ethnic diversity plays. Thus, this study hypothesises a relationship between ethnic diversity and MFI performance. We measure ethnic diversity using indices of fractionalisation. We find that fractionalisation is associated with poorer MFI financial performance and leads to MFI mission drift. Trust and strong social networks are important mechanisms of influence; they are lower in more fractionalised countries. Results are robust to several sensitivity checks.

  December 15, 2016   doi: 10.1111/1475-4932.12310   open full text
• Does Government Size Affect Per‐Capita Income Growth? A Hierarchical Meta‐Regression Analysis.
  Sefa Awaworyi Churchill, Mehmet Ugur, Siew Ling Yew.
  Economic Record. December 07, 2016
  Since the late 1970s, the received wisdom has been that government size (measured as the ratio of total government expenditure to gross domestic product (GDP) or government consumption to GDP) is detrimental to economic growth. We conduct a hierarchical meta‐regression analysis of 799 effect‐size estimates reported in 87 primary studies to verify if this assertion is supported by existing evidence. Our findings indicate that the conventional prior belief is supported by evidence mainly from developed countries but not from less developed countries. We argue that the negative relationship between government size and economic growth in developed countries may reflect endogeneity bias.

  December 07, 2016   doi: 10.1111/1475-4932.12307   open full text
• The Dynamic Behaviour of Implicit Inflation Targets for ‘Inflation Targeting Lite’ Economies.
  Vipul Bhatt, Amr Hosny, N. Kundan Kishor.
  Economic Record. November 09, 2016
  In this paper we estimate the evolution of the implicit inflation target underlying the monetary policy of 18 ‘inflation targeting lite’ economies (i.e., emerging countries that target inflation implicitly) using a time‐varying parameter specification of the Taylor rule. We find significant heterogeneity in the evolution of the estimated implicit inflation target across countries in our sample. We find that institutional factors characterising an economy, such as central bank independence, extent of financial development and fiscal soundness, are strongly associated with the level of the implicit inflation target.

  November 09, 2016   doi: 10.1111/1475-4932.12302   open full text
• The Reaction of the Australian Stock Market to Monetary Policy Announcements from the Reserve Bank of Australia.
  Alexandra Brown, Sigitas Karpavičius.
  Economic Record. October 21, 2016
  The aim of this paper is to explore the impact of monetary policy decisions by the Reserve Bank of Australia on the Australian stock market. We find some evidence that equity prices are negatively impacted by unexpected changes in the target cash rate. The result is generally consistent with existing studies that use US data in the analysis. We show that the stock market does not react to raw changes in the target cash rate, the expected component of raw cash rate changes, and the release of the explanatory meeting minutes.

  October 21, 2016   doi: 10.1111/1475-4932.12301   open full text
• Labour Market Inequality in Australia.
  Jeff Borland, Michael Coelli.
  Economic Record. October 06, 2016
  This article reviews developments in labour market inequality in Australia. First, descriptive information on changes in labour market inequality and on the causes of those changes is integrated with a summary of findings from recent research. Second, the effect of changes in labour market inequality on income inequality is evaluated. Third, evidence on differences in earnings and employment outcomes between specific groups – by gender, Indigenous status and country of birth – is considered. Finally, some suggestions for future research are presented.

  October 06, 2016   doi: 10.1111/1475-4932.12285   open full text
• Ethnic Diversity and Trust: New Evidence from Australian Data.
  Silvia Mendolia, Alex Tosh, Oleg Yerokhin.
  Economic Record. September 06, 2016
  This paper investigates the relationship between neighbourhood ethnic and linguistic heterogeneity and individuals’ local and generalised trust. A wide literature across economics and sociology has recognised the importance of trust in facilitating economic growth and development. We use fixed effects and instrumental variable regression and control for a wide set of individual and local area characteristics. Our results show that a 1 standard deviation increase in ethnic and linguistic fractionalisation is associated with a decrease in local trust of about 0.12 standard deviations, while we do not find any significant relationship between heterogeneity and generalised trust.

  September 06, 2016   doi: 10.1111/1475-4932.12295   open full text
• An NPV Analysis of Buying versus Renting for Prospective Australian First Home Buyers.
  Dominic Crowley, Shuyun May Li.
  Economic Record. August 08, 2016
  This paper explores buying versus renting as an investment decision for a prospective Australian first home buyer, by comparing the net present values of buying and renting. An ex‐post analysis for overlapping 10‐year periods from 1983 to 2015 for Australia's eight capital cities suggests that buying was financially more favourable than renting over most of the study period. Renting was favourable in some capital cities for the decade from 1983, but buying was clearly favourable from the early 1990s to early 2000s in all capital cities. An ex‐ante analysis suggests that buying is currently favourable in Sydney, Melbourne, Perth and Darwin.

  August 08, 2016   doi: 10.1111/1475-4932.12286   open full text
• In Praise of (Some) Red Tape: A New Approach to Regulation.
  Gordon Menzies, Peter Dixon, Maureen Rimmer.
  Economic Record. June 29, 2016
  The costs of removing red tape include a lower chance of detecting recession‐generating flaws in the financial system. What we call independent dimensions of regulation (IDRs) operate more or less independently from other groupings. If an IDR's optimality is unknown, it may be risky to remove. Uncertainty thus implies that (some) red tape – a small amount of overregulation – is justified, in contrast to the Brainard principle that uncertainty dictates less policy activism. The long‐run Gross Domestic Product (GDP) benefit of a 1 per cent improvement in financial services productivity is 0.06 per cent in our computable general equilibrium model. These relatively modest gains reinforce our conclusion.

  June 29, 2016   doi: 10.1111/1475-4932.12283   open full text
• Dating the Timeline of House Price Bubbles in Australian Capital Cities.
  Shuping Shi, Abbas Valadkhani, Russell Smyth, Farshid Vahid.
  Economic Record. June 29, 2016
  House prices in some Australian capital cities have recently been on the rise to the extent that some describe this as an emerging bubble, but this claim remains formally untested to date. We apply a recently developed time series procedure to detect, and time‐stamp, bubbles in house price to rent ratios in Australian capital cities. The results show a sustained, yet varying, degree of speculative behaviour in all capital cities in the 2000s before the 2008 global financial crisis (GFC) engulfing different housing markets. The onset of these bubbles was soon after the federal government introduced a major change to the capital gains tax law, and all of these bubbles collapsed with or before the GFC. As of January 2016 only Sydney exhibits significant evidence of an exuberant rise in house prices compared to rents. We believe that the method we apply has the potential to be a general early warning indicator to detect housing bubbles in other countries/markets. We provide the programming files to enable researchers to implement this test in other countries.

  June 29, 2016   doi: 10.1111/1475-4932.12284   open full text
• Firm‐Level Heterogeneity and the Aggregate Exchange Rate Effect on Exports.
  Robert Dekle, Hyeok Jeong, Heajin H. Ryoo.
  Economic Record. June 27, 2016
  We investigate what accounts for the different evidence between the aggregate and firm‐level data on the exchange rate elasticity of exports. The typical estimation of the macroeconomic export equations gives insignificant estimates for this elasticity compared to those from the recent firm‐level estimation. Using firm‐level data from Japan, we identify the sources of this discrepancy, and show that the failure to account for cost and demand factors as well as firm‐level productivity induces various kinds of biases for the aggregate estimate of the exchange rate elasticity of exports.

  June 27, 2016   doi: 10.1111/1475-4932.12276   open full text
• The Sticky Information Phillips Curve: Evidence for Australia.
  Christian Gillitzer.
  Economic Record. June 09, 2016
  The Sticky Information Phillips curve (SIPC) provides a theoretically appealing alternative to the sticky price New‐Keynesian Phillips curve (NKPC). This paper assesses the empirical performance of the SIPC for Australia. Estimates of the model's structural parameters indicate rejection of the SIPC over the low‐inflation period, but the SIPC fits the data better over a longer sample period including the disinflation of the early 1990s. Overall, though, the NKPC appears to fit the data better than the SIPC. This is partly because forward‐looking inflation dynamics are more important than implied by the SIPC under plausible parameter values.

  June 09, 2016   doi: 10.1111/1475-4932.12279   open full text
• The Deep Historical Roots of Macroeconomic Volatility.
  Sam Hak Kan Tang, Charles Ka Yui Leung.
  Economic Record. June 09, 2016
  We present cross‐country evidence that a country's macroeconomic volatility, measured either by the standard deviation of output growth or the occurrence of trend‐growth breaks, is significantly affected by the country's historical variables. In particular, countries with longer histories of state‐level political institutions experience less macroeconomic volatility in post‐war periods. Robustness checks reveal that the effect of this historical variable on volatility remains significant and substantial after controlling for a host of structural variables investigated in previous studies. We also find that the state history variable is more important in countries with a higher level of macroeconomic volatility.

  June 09, 2016   doi: 10.1111/1475-4932.12278   open full text
• Evaluation of an Incentive Program on Educational Achievement of Indigenous Students.
  Uwe Dulleck, Juliana Silva‐Goncalves, Benno Torgler.
  Economic Record. June 09, 2016
  This article introduces an incentive program that attempts to close the gap in educational attainment between Indigenous and non‐Indigenous Australians, and provides an evaluation of its effectiveness. The program uses in‐kind incentives conditional on achievement of a specific target for academic grades, classroom behaviour and attendance, coupled with information sessions on the importance of educational achievement. In 2012, all indigenous students enrolled in 21 high schools in Queensland were invited to take part in the program. Using a differences‐in‐differences design, we find that the program improved classroom behaviour and academic grades and reduced unexplained absences for female students only. In contrast, the program improved scores on a standardised national assessment test for male students. Moreover, we find that the program is only effective for students from intact families.

  June 09, 2016   doi: 10.1111/1475-4932.12273   open full text
• New Estimates of Intergenerational Mobility in Australia.
  Silvia Mendolia, Peter Siminski.
  Economic Record. June 08, 2016
  We present new estimates of intergenerational earnings elasticity for Australia. We closely follow the methodology used by Leigh [BE Journal of Economic Analysis & Policy, 7 (2007) 1], but use considerably more data (12 waves of HILDA and four waves of PSID). Our adjusted estimates are intended to be comparable to those for other countries in Corak [Journal of Economic Perspectives, 27 (2013) 79]. Our preferred estimate (0.35) is considerably higher than implied by Leigh's study, and is less subject to sampling variation. In an international context, intergenerational mobility in Australia is not particularly high, and is consistent with its relatively high level of cross‐sectional inequality.

  June 08, 2016   doi: 10.1111/1475-4932.12274   open full text
• An Australian Contribution to International Trade Theory: The Dependent Economy Model.
  Phillip Edmund Metaxas, Ernst Juerg Weber.
  Economic Record. June 07, 2016
  The dependent economy model is also known as the ‘Australian model’ and the ‘Salter–Swan–Corden–Dornbusch model’ but neither title adequately conveys the scope and sequence of contributions that were instrumental to its development. In this paper attention is given to indispensable contributions made by the Australian public servant Roland Wilson and the British economist James Meade. The model's development is placed in the broader context of the evolution of balance of payments theory, and the paper highlights a vital Australian contribution to international trade theory, namely, the identification of the real exchange rate as the critical relative price in balance of payments adjustment.

  June 07, 2016   doi: 10.1111/1475-4932.12264   open full text
• The New Keynesian Phillips Curve in a Small Open Economy: Empirical Evidence from Australia.
  Syed Kanwar Abbas, Prasad Sankar Bhattacharya, Debdulal Mallick, Pasquale Sgro.
  Economic Record. May 06, 2016
  This study estimates the new Keynesian Phillips curve (NKPC) of Gali and Monacelli for a small open economy using Australian data. Our detailed investigation hinges on estimating the structural parameters in five different variants of the Gali–Monacelli NKPC, which relates the inflation process to terms of trade and the real exchange rate; the marginal cost and output gap as proxies for real economic activity and the hybrid version incorporating both forward‐ and backward‐looking inflation expectations. The analysis and extensive robustness checks overwhelmingly establish that the Gali–Monacelli NKPC cannot explain the dynamics of inflation and is rejected by the Australian data.

  May 06, 2016   doi: 10.1111/1475-4932.12262   open full text
• Revealed Preference Measures of Quality of Life in Australia's Urban and Regional Areas.
  Grace Gao, Daniel Melser.
  Economic Record. May 05, 2016
  Using data from the 2011 Census, we estimate quality of life across Australia. With mobile households, utility will be equalised across regions, so those regions with high real incomes must have a compensating low quality of life and vice versa. There are significant differences in quality of life across the 56 regions we examine. The top‐ranked region in our study is the Eastern Suburbs of Sydney, while the Western Australian Outback has the lowest quality of life. The drivers of quality of life are explored, and climate appears to be important as well as certain human‐made cultural amenities.

  May 05, 2016   doi: 10.1111/1475-4932.12261   open full text
• Evolutionary Biology in Economics: A Review.
  Jason Collins, Boris Baer, Ernst Juerg Weber.
  Economic Record. May 05, 2016
  As human traits and preferences were shaped by natural selection, there is substantial potential for the use of evolutionary biology in economic analysis. In this paper, we review the extent to which evolutionary theory has been incorporated into economic research. We examine work in four areas: the evolution of preferences, the molecular genetic basis of economic traits, the interaction of evolutionary and economic dynamics, and the genetic foundations of economic development. These fields comprise a thriving body of research, but have significant scope for further investigation. In particular, the growing accessibility of low‐cost molecular data will create more opportunities for research on the relationship between molecular genetic information and economic traits.

  May 05, 2016   doi: 10.1111/1475-4932.12260   open full text
• Understanding Wage Inequality in Australia.
  Arpita Chatterjee, Aarti Singh, Tahlee Stone.
  Economic Record. May 05, 2016
  In this paper we document the rise in wage inequality in Australia over the last decade. A key driver of this inequality is unobservable or residual inequality. We decompose residual wage inequality into permanent and transitory components. The estimates of the permanent shock from the first‐difference approach allow us to reconcile life‐cycle wage inequality.

  May 05, 2016   doi: 10.1111/1475-4932.12263   open full text
• A Multi‐sector Model of the Australian Economy.
  Daniel M. Rees, Penelope Smith, Jamie Hall.
  Economic Record. April 26, 2016
  This paper describes the dynamic stochastic general equilibrium (DSGE) model currently in use at the Reserve Bank of Australia. The model extends previous DSGE models of the Australian economy by incorporating multiple production sectors, including a resource sector. We estimate the model, describe its dynamic properties, illustrate its use in scenario analysis and use it to identify the sources of Australian business cycle fluctuations.

  April 26, 2016   doi: 10.1111/1475-4932.12259   open full text
• Flood Risk Information, Actual Floods and Property Values: A Quasi‐Experimental Analysis.
  Darshana Rajapaksa, Clevo Wilson, Shunsuke Managi, Vincent Hoang, Boon Lee.
  Economic Record. April 13, 2016
  Hedonic property price analysis tells us that property prices can be affected by natural hazards such as floods. This paper examines the impact of flood‐related variables (among other factors) on property values, and examines the effect of the release of flood risk map information on property values by comparing the impact with the effect of an actual flood incidence. An examination of the temporal variation of flood impacts on property values is also made. The study is the first of its kind where the impact of the release of flood risk map information to the public is compared with an actual flood incident. In this study, we adopt a spatial quasi‐experimental analysis using the release of flood risk maps by Brisbane City Council in Queensland, Australia, in 2009 and the actual floods of 2011. The results suggest that property buyers are more responsive to the actual incidence of floods than to the disclosure of information to the public on the risk of floods.

  April 13, 2016   doi: 10.1111/1475-4932.12257   open full text
• A Critique of the Bucket Classification of Journals: The ABDC List as an Example.
  Imad A. Moosa.
  Economic Record. April 08, 2016
  Journal ranking is a hazardous endeavour even if it is based on objective criteria. Additional problems arise from the use of an opinion‐based bucket classification of journals. As a bucket classification system, the ABDC list encourages rent‐seeking and arbitrage whereby a researcher goes for the lowest‐quality journal within each bucket or moves to another bucket. The quality of research output should not be judged on the basis of a predetermined list. It would be beneficial if the Australian Business Deans Council list were abandoned for the same reasons that led to the abandonment of the Excellence in Research for Australia list.

  April 08, 2016   doi: 10.1111/1475-4932.12258   open full text
• How Portfolios Evolve after Retirement: Evidence from Australia.
  Alexandra Spicer, Olena Stavrunova, Susan Thorp.
  Economic Record. March 16, 2016
  Households in many countries reach retirement with lump sums of financial wealth accumulated in defined contribution retirement plans. Retired households need to manage risks and generate income from their savings. We study the dynamics of retirement wealth and portfolio allocation using the three wealth waves of the Household, Income and Labour Dynamics in Australia panel survey. The average retired household maintained or accumulated wealth in 2002–2006 and decumulated in 2006–2010 consistent with trends in financial asset prices. At older ages, households prefer portfolios with less risk and more liquidity, while maintaining ownership of the family home. The probability of households exhausting financial assets increased over the sample, but households who depleted financial wealth did not liquidate their housing wealth at higher rates than other households. In contrast to the USA, the overall effect of health shocks on the wealth of retired Australian households is minimal, but financial shocks have large effects.

  March 16, 2016   doi: 10.1111/1475-4932.12255   open full text
• Does Political and Economic Inequality Affect Institutional Quality?
  Nadezhda V. Baryshnikova, Ngoc T.A. Pham, Maria M. Wihardja.
  Economic Record. March 06, 2016
  We study how inequality, democracy and economic development affect institutions in a dynamic panel model using data for 78 countries from 1984 to 2006. We suggest a model that assumes the sluggish adjustment of institutional quality and the interplay between the key explanatory variables. We find that democracy has a non‐linear effect on government stability and military involvement in politics. This effect depends on inequality and GDP per capita. Inequality matters for law and order and has a non‐linear effect as well. However, the results for wealth effect are mixed.

  March 06, 2016   doi: 10.1111/1475-4932.12246   open full text
• On the Existence of a Middle‐Income Trap.
  Longfeng Ye, Peter E. Robertson.
  Economic Record. March 04, 2016
  The concept of a ‘middle‐income trap’ has attracted enormous interest, but the existing literature lacks formal tests. We develop and apply a test of some necessary conditions for a country to be in a middle‐income trap that take into account short‐run dynamics, stochastic trends and structural breaks. We find that only seven countries satisfy our definition of a middle income trap.

  March 04, 2016   doi: 10.1111/1475-4932.12245   open full text
• Impatient in Experiments, but Patient in Simulations: A Challenge to the Heckman‐Type Model.
  Emin Gahramanov, Xueli Tang.
  Economic Record. February 25, 2016
  Intertemporal labour–leisure choice models typically assume agents have a very low degree of impatience. Yet there is a lot of empirical evidence indicating a high degree of impatience. Using a life‐cycle model of consumption–saving and labour–leisure choice, we show that even if an agent displays a relatively moderate degree of impatience, his labour supply choice delivers highly counterfactual patterns. We resolve this counterfactual finding by augmenting the standard model with a time‐dependent marginal utility of leisure assumption that is consistent with some recent evidences from leisure studies. We also introduce various extensions and discuss their relative importance and associated challenges.

  February 25, 2016   doi: 10.1111/1475-4932.12244   open full text
• Binge Drinking and Antisocial and Unlawful Behaviours in Australia.
  Ou Yang, Xueyan Zhao, Preety Srivastava.
  Economic Record. February 24, 2016
  This paper presents individual‐level evidence from Australia to examine the factors associated with binge drinking and several alcohol‐related antisocial and unlawful behaviours. We study in particular the role of binge drinking in increasing the likelihood of engaging in these negative behaviours. We use individual‐level data from a national representative survey and a system econometric model that allows unobservable factors for all negative behaviours to be correlated. Potential misclassification of individuals' drinking pattern is accounted for. We find evidence of under‐reporting for bingeing and significant effects of binge drinking on drink‐driving, physical and verbal abuse, public disturbance, and stealing and damaging property.

  February 24, 2016   doi: 10.1111/1475-4932.12243   open full text
• How Can Uncertainty Affect the Choice of Trade Agreements?
  Elie Appelbaum, Mark Melatos.
  Economic Record. January 18, 2016
  This paper analyses how uncertainty influences the formation and design of regional trade agreements (TAs). Two sources of uncertainty – in demand and costs – are considered. Using a multi‐stage game, we show that, as long as some decisions are made after uncertainty is resolved, all TAs have option values. But, because TAs differ in their flexibility and degrees of coordination, these option values vary across TAs. Thus, under uncertainty, the usual cost–benefit analysis that underlies the formation and design of TAs is altered to reflect these option values. We also show that, due to the flexibility and coordination differences among TAs, their option values are affected differently by uncertainty. Consequently, the formation and design of TAs are also affected by the nature and degree of uncertainty. We demonstrate that the effects of an increase in uncertainty on the choice of TAs depend on the relative responsiveness of the TAs' option values with respect to the change in uncertainty, which in turn depend on the convexity properties of the countries' welfare functions under the different TAs. In particular, a TA whose option value is more responsive to a change in uncertainty becomes relatively more attractive when uncertainty increases. This enables us to predict which TAs are likely to emerge in an uncertain world. Using a specific example, we then show the effects of a change in both demand and cost uncertainty on the choice of TAs. We also examine the timing of the resolution of uncertainty and its effect on the choice of TAs and show that it can significantly impact the type of TA that countries wish to form.

  January 18, 2016   doi: 10.1111/1475-4932.12241   open full text
• Dynamic and Static Asking Prices in the Sydney Housing Market.
  Peyman Khezr, Flavio M. Menezes.
  Economic Record. January 18, 2016
  This paper investigates the impact of two commonly used asking price strategies on house sales prices. In particular, we compare a dynamic asking price, where the seller adjusts her asking price over time as she fails to sell her property, with a static asking price, where the seller sets an asking price and sticks to it until the property is sold. While we show this comparison to be ambiguous from a theoretical perspective, our empirical study, using a comprehensive dataset of the properties sold in the greater Sydney region in 2011, indicates that properties with a dynamic asking price sold, on average, for approximately 1.9 per cent less than properties with a static asking price. In addition, we show that, controlling for the asking price strategy, the duration of sale has a significant impact on sales prices.

  January 18, 2016   doi: 10.1111/1475-4932.12242   open full text
• Retiree Welfare and the 2009 Pension Increase: Impacts from an Australian Experiment.
  Serena Yu.
  Economic Record. December 28, 2015
  The welfare effects from the 2009 increase in the age pension are evaluated using a quasi‐experimental, difference‐in‐difference regression framework. Using microdata to exploit the exogenous and large increase in the single‐person pension rate, the research finds significant improvements in the material welfare of single age pensioners. In particular, non‐housing and total consumption rose by 7 per cent and 4 per cent, respectively. The effects were amplified among the poorest retirees. The study extends the literature on the welfare benefits of pension programs, and provides evidence that the policy changes were highly effective in lifting the material welfare of the targeted beneficiaries.

  December 28, 2015   doi: 10.1111/1475-4932.12237   open full text
• On Britain's Return to the Gold Standard: Was there a ‘Pigou–McKenna School’?
  Rogério Arthmar, Michael McLure.
  Economic Record. December 11, 2015
  It is common to refer to the ‘Keynes–McKenna school’ in opposition to Britain's return to the gold standard. However, after considering A.C. Pigou's reading of Sir Reginald McKenna's testimony to the Chamberlain–Bradbury Committee and the influence of that reading on Pigou's draft of the Committee's report to the British government, the case is made for the ‘Pigou–McKenna school’ as a policy school that was supportive of a return to the gold standard but against doing so prematurely. This is perhaps more meaningful than reference to the ‘Keynes–McKenna school’, which incorrectly implies that McKenna was opposed to Britain returning to gold.

  December 11, 2015   doi: 10.1111/1475-4932.12240   open full text
• An Economic Analysis of Attendance Demand for One Day International Cricket.
  Abhinav Sacheti, David Paton, Ian Gregory‐Smith.
  Economic Record. December 11, 2015
  The future of One Day International (ODI) cricket has come under scrutiny following increasing competition from other formats of cricket. We identify trends in attendance demand by examining over 540 ODI matches played in Australia and England between 1981 and 2015. We use fixed effects and Tobit random effects models to isolate key determinants of attendance demand for ODI cricket and, in particular, the impact of uncertainty of outcome. We find that team strength has little independent effect on ODI attendances, but the uncertainty of the match outcome, as measured by the relative strengths of the teams over a long period of time, increases demand for ODI matches in England. Further, organising the ODI as a day/night (floodlit) game has a large positive impact on attendance in Australia.

  December 11, 2015   doi: 10.1111/1475-4932.12239   open full text
• Effectiveness of the Australian Fiscal Stimulus Package: A DSGE Analysis.
  Shuyun May Li, Adam Hal Spencer.
  Economic Record. November 12, 2015
  We develop and estimate a small open economy dynamic stochastic general equilibrium model to investigate the effectiveness of the Australian fiscal stimulus package introduced in the aftermath of the global financial crisis (GFC). The estimated model implies a fiscal multiplier of 0.9 on impact and 1.26 with one‐year monetary accommodation. Utilising the estimated shocks – in particular, the fiscal shocks that mimic the stimulus transfers – we conduct several counterfactual policy experiments. Our results suggest that the stimulus transfers were almost equally important as the concurrent monetary easing actions in helping the Australian economy to avoid a recession after the GFC.

  November 12, 2015   doi: 10.1111/1475-4932.12224   open full text
• Roles of Education in Productivity Growth in Australia, 1860–1939.
  Rajabrata Banerjee, John K. Wilson.
  Economic Record. November 11, 2015
  Despite a significant literature comparing Europe and the USA, and linking education and human capital to growth and development, there is virtually no research in the Australian context which attempts to investigate this link empirically. Australia is an interesting case because it was one of the world's wealthiest nations in the late nineteenth century. The economy was built on agriculture and mining, but there was no obvious evidence of a natural resource curse despite losing ground on the leading nations. This study fills a gap in the literature by examining the effect of education and schooling on productivity growth between 1860 and 1939 using a unique dataset from the colony of Victoria. Using a growth accounting exercise, we examine the role of productivity changes in the overall growth picture of Victoria and Australia as a whole. We find evidence for productivity‐led growth for both. Exploring the relationship between productivity and education measures, we find that while primary school enrolments were important to sustain productivity growth throughout the period, tertiary education was more effective in the first half of the twentieth century.

  November 11, 2015   doi: 10.1111/1475-4932.12226   open full text
• Job Polarisation and Earnings Inequality in Australia.
  Michael Coelli, Jeff Borland.
  Economic Record. November 09, 2015
  We investigate changes in the occupation structure in Australia between 1966 and 2011, and the effect of these changes on the earnings distribution. Occupation changes exhibited job polarisation (growth in high and low skill jobs, declines in middle skill jobs) in the 1980s and 1990s and general upskilling in the 1970s and 2000s. Any job polarisation has been primarily a male phenomenon. Occupation changes were consistent with the loss of jobs that were high in routine task intensity. Changes in occupational composition and associated earnings changes contributed significantly to growth in overall earnings inequality from the mid‐1980s to the mid‐2000s.

  November 09, 2015   doi: 10.1111/1475-4932.12225   open full text
• The Medical Care Costs of Mood Disorders: A Coarsened Exact Matching Approach.
  Stefanie Schurer, Michael Alspach, Jayden MacRae, Gregory Martin.
  Economic Record. September 29, 2015
  We use the method of coarsened exact matching (CEM) and general practice patient‐record data from New Zealand to estimate the impact of mood disorders on medical care costs. The CEM model exploits a discretisation of the data to identify for each patient with a mood disorder a perfect statistical twin, which allows us to control for comorbidity‐related variations in medical care costs. CEM with perfect balancing of covariates yields lower annual cost estimates of mood disorders per patient (NZ$366) than regression or conventional matching methods (between $NZ372 and $413). National government expenditures on managing mood disorders are estimated to lie between 0.06 per cent and 0.10 per cent of GDP.

  September 29, 2015   doi: 10.1111/1475-4932.12218   open full text
• Disability and Multi‐State Labour Force Choices with State Dependence.
  Umut Oguzoglu.
  Economic Record. September 21, 2015
  Using the first 12 waves of the Household, Income and Labour Dynamics in Australia survey, the impact of work‐limiting disabilities on disaggregated labour force choices is investigated. Findings from a dynamic mixed multinomial logit model point to a significant decline in the likelihood of full‐time and part‐time work due to disability. Combined with strong state dependence in employment choices, this suggests a slow recovery from a disability shock. Model simulations suggest that high cross‐ and own‐state dependence can amplify a one‐off disability shock to alter the probability of full‐time employment and non‐participation over a long period, especially for low‐skilled individuals.

  September 21, 2015   doi: 10.1111/1475-4932.12222   open full text
• Is Part‐time Employment a Stepping Stone to Full‐time Employment?
  Lixin Cai, Vincent Law, Michael Bathgate.
  Economic Record. May 15, 2014
  This study examines the stepping stone effect of part‐time employment for working‐age Australians. Using the Household, Income and Labour Dynamics in Australia (HILDA) Survey, the study finds that part‐time employment increases the probability of future full‐time employment by approximately nine percentage points for males and approximately six percentage points for females, compared to those who were initially not in the labour force, after observed and unobserved individual heterogeneity is accounted for. However, part‐time employment does not appear to have a stepping stone effect when compared with unemployment.

  May 15, 2014   doi: 10.1111/1475-4932.12120   open full text
• The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation.
  Jun Feng.
  Economic Record. May 10, 2014
  In this study, we examine choices in voluntary superannuation contributions by Australian income earners. In particular, we focus on salary sacrifice contributions, which could attract a tax benefit of up to 30 percentage points. This study aims to evaluate how effective tax incentives are in stimulating salary sacrifice participation. Using a regression discontinuity framework, we measure the response of individuals to different levels of tax concessions on salary sacrifice contributions. Results indicate that current tax incentives have a limited effect, if any, on the decision to make salary sacrifice arrangements. This result is consistent with more recent empirical research from the Northern Hemisphere. It is likely that the lack of response is due to the complexity of the incentive schemes in Australia and competing vehicles for long‐term savings.

  May 10, 2014   doi: 10.1111/1475-4932.12131   open full text
• Does a Nearby Murder Affect Housing Prices and Rents? The Case of Sydney.
  Anastasia Klimova, Adrian D. Lee.
  Economic Record. May 07, 2014
  We measure the impact of murders on prices and rents of homes in Sydney. We find that housing prices fall by 3.9 per cent for homes within 0.2 miles of the murder in the year following the murder, and weaker results in the second year after a murder. We do not find any effects of murders on rents. Higher media coverage and being located closer to the murder (within 0.1 mile) have no additional effect on prices. Taken together, our findings suggest that proximity to a murder affects nearby property prices, particularly in the first year after the incident.

  May 07, 2014   doi: 10.1111/1475-4932.12118   open full text
• Output Composition of the Monetary Policy Transmission Mechanism: Is Australia Different?
  Tuan Phan.
  Economic Record. May 05, 2014
  This article compares the output composition of the monetary policy transmission mechanism in Australia to that for the Euro area and the USA. Four vector autoregressive (VAR) models are used to estimate the contributions of private consumption and investment to output reactions resulting from nominal interest rate shocks for the period 1982Q3–2007Q4. The results suggest that the investment channel plays a more important role than the consumption channel in Australia, while the contributions of the two channels are indistinguishable in the Euro area and the USA. The difference between Australia and the Euro area comes from differences in housing investment responses, whereas Australia is different to the USA mainly because it has a lower share of household consumption in total demand.

  May 05, 2014   doi: 10.1111/1475-4932.12121   open full text
• The Effects of Fiscal Policy in New Zealand: Evidence from a VAR Model with Debt Constraints.
  Oscar Parkyn, Tugrul Vehbi.
  Economic Record. May 05, 2014
  This article investigates the macroeconomic effects of fiscal policy in New Zealand using a structural vector autoregression (SVAR) model. The model is the five‐variable SVAR framework proposed by Perotti (), further augmented to allow for the possibility that taxes, spending and interest rates might respond to the level of the debt over time. We examine the dynamic responses of output, inflation and the interest rate to changes in government spending and revenues and analyse the contribution of shocks to New Zealand's business cycle for the period 1983:1–2010:2. We find that the effects of government expenditure shocks in New Zealand appear to be positive but small in the short run at the cost of higher interest rates and lower output in the medium to long run. The sign of the effects of tax policy changes are less clear‐cut, but again the effects on GDP appear similarly modest. Past fiscal policy is analysed through a historical decomposition of the shocks in the model. This suggests that discretionary fiscal policy has had a generally pro‐cyclical impact on GDP over the past 15 years, and a material impact on the real long‐term interest rate. A fiscal expansion has a positive but limited impact on inflation.

  May 05, 2014   doi: 10.1111/1475-4932.12116   open full text
• Government Size, Government Debt and Economic Performance with Particular Application to New Zealand.
  J. Stephen Ferris.
  Economic Record. May 05, 2014
  This analysis finds that long‐run government size and private per capita output have an inverted U‐shaped relationship, with the positive effect of government size peaking at close to 30 per cent of GDP. As larger debt is also associated with lower levels of private output, the recent policy of contraction in government size and debt in New Zealand has produced an output premium. The short‐run analysis suggests that the inverse relationship found between changes in government size and economic growth is attributable to counter‐cyclical fiscal policy. This reinforces the traditional role of fiscal policy in New Zealand while cautioning against longer‐run spillovers from larger government size and debt.

  May 05, 2014   doi: 10.1111/1475-4932.12119   open full text
• An Emissions Trading Scheme for Australia: National and Regional Impacts.
  Philip D. Adams, Brian R. Parmenter, George Verikios.
  Economic Record. April 28, 2014
  Computable general equilibrium modelling in Australia is oriented towards providing inputs to the policy‐formation process, a process that requires detail. We explain how the necessary level of detail can be provided using analysis of the potential economic impacts of a carbon price on the Australian economy that operates as part of a global emissions trading scheme. The global scheme sets the price and allocation of permits across countries. We find that domestic abatement falls well short of targeted abatement, Australia's GDP is 1.1 per cent lower relative to the basecase, and some industries and regions are vulnerable to employment losses.

  April 28, 2014   doi: 10.1111/1475-4932.12117   open full text
• Agglomeration Economies and Productivity Growth in Manufacturing Industry: Empirical Evidence from Indonesia.
  Wahyu Widodo, Ruhul Salim, Harry Bloch.
  Economic Record. April 21, 2014
  This study examines the effect of agglomeration economies on productivity growth in Indonesian manufacturing industries during the first decade of this century. Productivity growth is measured at the firm level using the Färe‐Primont Productivity Index. Each firm's productivity growth is then regressed against a set of firm and industry characteristics, including three measures of agglomeration representing the effects of specialisation, diversity and competition. The results show evidence of a positive specialisation effect and a negative diversity effect for aggregate manufacturing and sub‐sectors. Furthermore, there are mixed effects across industries, suggesting that Porter's competition externalities stimulate firm productivity growth under some conditions but not others.

  April 21, 2014   doi: 10.1111/1475-4932.12115   open full text
• Differential Impacts of Foreign Capital and Remittance Inflows on Domestic Savings in Developing Countries: A Dynamic Heterogeneous Panel Analysis.
  Delwar Hossain.
  Economic Record. April 17, 2014
  The study examines the role of foreign capital and remittance inflows in the domestic savings of 63 developing countries for 1971–2010, paying attention to likely differential effects of FDI, portfolio investment, foreign aid and remittances. The conventional homogeneous panel estimates suggest that foreign aid and remittance flows have a significant negative impact on domestic savings. However, these techniques ignore cross‐section dependence and parameter heterogeneity properties and hence yield biased and inconsistent estimates. When we allow for parameter heterogeneity and cross‐sectional dependence by employing Pesaran's () Common Correlated Effects Mean Group estimator technique, only remittances crowd out savings.

  April 17, 2014   doi: 10.1111/1475-4932.12114   open full text
• FDI and Outsourcing in a Service Industry: Welfare Effects of Liberalising Trade and Investment.
  Te‐Cheng Lu, Yan‐Shu Lin, Jin‐Li Hu.
  Economic Record. April 11, 2014
  This study examines a foreign firm's entry decision and its effects on the host country's welfare in a model with a composite good in which both commodity and service generate utility for consumers. Along with the commodity it produces, a producer can provide the service by itself or outsource the service. The result shows that the incentive for foreign direct investment (FDI) in the service sector increases under liberalising trade in the final‐good market. Moreover, there exist policy combinations of trade and investment liberalisation, whereby the domestic firms' profitability is traded off with the host country's social welfare when the foreign firm provides a service through FDI or through outsourcing, respectively. Finally, the welfare after simultaneously liberalising trade and investment is not necessarily greater than that under autarky.

  April 11, 2014   doi: 10.1111/1475-4932.12112   open full text
• On the Measurement of Strength of Preference in Units of Money.
  David Butler, Andrea Isoni, Graham Loomes, Daniel Navarro‐Martinez.
  Economic Record. April 03, 2014
  We report an experimental study that aims to elicit monetary measures of strength of preference in choices involving pairs of risky prospects. Despite extensive testing to refine the instruments used, we find that these money measures are systematically biased upwards relative to subsequent binary choices. We discuss possible reasons for this bias and its broader implications.

  April 03, 2014   doi: 10.1111/1475-4932.12113   open full text
• Optimal Trade Policy under Endogenous Foreign Entry.
  Federico Etro.
  Economic Record. March 18, 2014
  I characterise the optimal unilateral trade policy for domestic firms competing in domestic or integrated markets with endogenous entry of foreign firms. Under conditions satisfied in most trade models (as with quasi‐linear or CES preferences) the analysis is simplified by a Neutrality Theorem: any policy affecting the profitability of the domestic firm is not going to affect consumer surplus and the strategies of the foreign firms, but affects their entry decisions. In a domestic market, we fully characterise the optimal import tariff: this is positive in the classic linear Cournot case, but with a convex demand or product differentiation it is optimal to adopt an import subsidy. In an integrated market, the optimal subsidy to domestic production is always positive, independent from form of competition and size of the domestic market.

  March 18, 2014   doi: 10.1111/1475-4932.12108   open full text
• The Debt Maturity Issue in Access Pricing.
  Kevin Davis.
  Economic Record. March 18, 2014
  There has been substantial debate and disagreement over the appropriate debt maturity used in determining the cost of debt for use in access pricing decisions in Australia. Some regulators have used a debt maturity corresponding to the length of the regulatory reset period (typically five years). Others have used a longer maturity based on the argument that the assets being financed are long‐lived. In this article it is demonstrated that under the current Australian approach, to meet the objectives of access pricing, the assumed debt maturity should be set equal to the term of the regulatory reset period. Whether practical debt management difficulties for access providers suggest that an alternative approach, placing more emphasis on their actual debt costs (as occurs in some other jurisdictions) should be considered, is also discussed.

  March 18, 2014   doi: 10.1111/1475-4932.12110   open full text
• Spatial Variation in Prices and Expenditure Inequalities in Australia.
  Ankita Mishra, Ranjan Ray.
  Economic Record. March 18, 2014
  This study proposes a method of calculating preference‐based spatial price indices that measure price variation between regions. It shows how the traditional concept of the ‘true cost of living index’, used in temporal price comparisons, can also be used in spatial price comparisons. The usefulness of the proposed procedures is illustrated by applying them to Australian household expenditure data. The results show that during the past two decades spatial price variation has increased steadily, with the most recent period (2005–2009) witnessing a large increase. The results also show that the ranking of the states, on both cost of living and inequality, has altered significantly over the past two decades.

  March 18, 2014   doi: 10.1111/1475-4932.12109   open full text
• Just Interested or Getting Involved? An Analysis of Superannuation Attitudes and Actions.
  Hazel Bateman, Jeanette Deetlefs, Loretti I. Dobrescu, Ben R. Newell, Andreas Ortmann, Susan Thorp.
  Economic Record. March 18, 2014
  Low levels of non‐default decision‐making among superannuation members in Australia are assumed to be evidence of a lack of interest and capability. Using member records and survey data from a large Australian superannuation fund, we test the relationship between attitudes towards retirement savings and observable levels of non‐default activities (such as making voluntary contributions, choosing or changing investment options and changing insurance cover). Additional retirement savings contributions by permanent staff are more likely if the staff member is very likely to recommend their superannuation fund. Individuals who rate their own personal interest in superannuation affairs as very high are more likely to be active online. This, however, does not extend to choosing a non‐default investment or purchasing additional insurance, where we find no differences between the highly interested and the disengaged. These findings, together with several other differences related to demographics and employment conditions, show that non‐default activity is not a reliable proxy for member engagement.

  March 18, 2014   doi: 10.1111/1475-4932.12107   open full text
• Monetary Policy and the Uncovered Interest Rate Parity Puzzle: Theory and Empirical Results for Oceania.
  Alfred V. Guender.
  Economic Record. January 31, 2014
  This article offers a theory‐based explanation for why high‐ interest‐rate countries see their currencies appreciate, the so‐called UIP puzzle. The central bank bases its target rule on the lag of the policy instrument and the CPI inflation rate. When combined with a stylised model of an open economy, the endogenous target rule can account for the systematic negative relation between the change in the exchange rate and the lagged interest rate differential. Foreign inflation and the foreign interest rate also affect nominal exchange rate changes. The model‐based behaviour of the exchange rate is tested on New Zealand and Australian data with mixed results.

  January 31, 2014   doi: 10.1111/1475-4932.12097   open full text
• Risk‐Sharing, Vulnerability and the Global Financial Crisis.
  Stephen Matteo Miller.
  Economic Record. January 11, 2014
  Tests using Household, Income and Labour Dynamics in Australia unit record data from 2006–07 to 2010–11 indicate that Australian households on average insure against idiosyncratic income shocks. For a 10 per cent change in income, non‐durable expenditures change by 0.14 per cent, while food expenditures change by 0.05 per cent; both results are statistically insignificant. Non‐durable expenditures respond asymmetrically to positive and negative income shocks, especially during the Global Financial Crisis, rising by 0.1 per cent for a 10 per cent income rise but falling by 0.6 per cent for a 10 per cent income decline in 2009; the latter result is statistically significant. Controlling for risk tolerance heterogeneity yields identical results.

  January 11, 2014   doi: 10.1111/1475-4932.12095   open full text
• Evaluating the Evidence on Income Inequality in Australia in the 2000s.
  Roger Wilkins.
  Economic Record. January 11, 2014
  Published ABS data from the Survey of Income and Housing (SIH) show a substantial increase in income inequality between 2001 and 2010. However, almost all of the increase occurred over a period when changes in survey methodology and income concept were occurring. I present results of analysis of the SIH unit record data, as well as independent evidence provided by the Household, Income and Labour Dynamics in Australia Survey. On the basis of this analysis, I conclude that the SIH overstates the growth in income inequality, even when the income variable examined is notionally consistently defined across surveys. The extent of overstatement is, however, uncertain. Furthermore, it is likely that the picture provided by the SIH data in 2010 is more accurate than the picture provided by the SIH data in 2001 – that is, the ABS is now better measuring income in its household income surveys. Therefore, measured inequality at the start of the decade was too low, rather than measured inequality at the end of the decade being too high.

  January 11, 2014   doi: 10.1111/1475-4932.12090   open full text
• How Windfall Income Increases Gambling at Poker Machines.
  Hielke Buddelmeyer, Kyle Peyton.
  Economic Record. January 10, 2014
  In December 2008 and March–April 2009, the Australian Government used fiscal stimulus as a short‐run economic stabilisation tool for the first time since the 1990s. In May–June 2012, households received lump‐sum cheques as compensation for the introduction of the Carbon Tax scheduled for 1 July 2012. This article examines the relationship between these financial windfalls and spending at electronic gaming machines (EGMs) using data from 62 local government areas in Victoria, Australia. The results show large increases in spending at EGMs during the periods when Australian households received economic stimulus cheques. We estimate increased spending at EGMs in December 2008, for example, amounted to 1 per cent of the total stimulus for that period. These findings are consistent with behavioural models of consumption and demonstrate the relative power of framing windfall income as a bonus rather than rebate, especially when targeted at particular sociodemographic subpopulations. Our analysis also calls into question the conventional wisdom that large portions of government payments end up in poker machines.

  January 10, 2014   doi: 10.1111/1475-4932.12094   open full text
• Do SVAR Models Justify Discarding the Technology‐Shock‐Driven Real Business Cycle Hypothesis?
  Hyeon‐Seung Huh, David Kim.
  Economic Record. January 10, 2014
  This study investigates the validity of technology shocks as a driving force of US business cycle fluctuations. Using three well‐known structural vector autoregression (SVAR) models, we analyse how structural shocks are associated with the variations of output and hours worked at business cycle frequencies. Empirical results reveal that technology shocks remain an important source of cyclical movements in output. Furthermore, a positive technology shock does not lead to a decline in hours worked, in contrast to previous studies. Our SVAR‐based evidence does not support discarding a technology‐shock‐driven business cycle theory.

  January 10, 2014   doi: 10.1111/1475-4932.12096   open full text
• Patents, Transaction Costs and Academic Research Project Choice.
  Paul H. Jensen, Elizabeth Webster.
  Economic Record. December 19, 2013
  Survey data from over 3,000 academic scientists show that nearly half of these scientists report that their choice of research projects has been affected (to some degree) by the presence of third‐party patents. Our evidence suggests that the operation of this patent‐induced effect is through (i) restrictions patent owners place on the timing of follow‐on publications and (ii) disincentives for open exchange of information between scientists. While the need to translate science into commercial use is potentially a valuable source of productivity growth, this should be balanced against the need for openness and information sharing in the scientific realm.

  December 19, 2013   doi: 10.1111/1475-4932.12093   open full text
• Unpacking the Beauty Premium: What Channels Does It Operate Through, and Has It Changed Over Time?
  Jeff Borland, Andrew Leigh.
  Economic Record. December 17, 2013
  Using data from representative samples of the Australian population in 1984 and 2009, we make two main contributions to analysis of the economic returns of beauty. First, we broaden analysis of the effects of beauty beyond the labour market to examine its relation to household income. We find that beauty significantly affects total household income – via respondents' probability of employment and their hours of work and hourly wage, and whether they have a partner who contributes income to the household. Second, we examine whether the returns to beauty in Australia changed between the 1980s and 2000s. It is found that, for the most part, the effect of beauty was constant across this period. There is, however, some evidence of an increasing effect of beauty on the likelihood that a female respondent is employed, which we suggest may be due to selection effects and the growth in female workforce participation.

  December 17, 2013   doi: 10.1111/1475-4932.12091   open full text
• Managerial Delegation, Cost Asymmetry and Social Efficiency of Entry.
  Arijit Mukherjee, Yingyi Tsai.
  Economic Record. December 14, 2013
  This article examines the welfare implications of entry in oligopolistic markets with separation of management from ownership. In the presence of strategic managerial delegation and cost asymmetry, entry is socially insufficient unless the degree of scale economies is large. This result is in stark contrast to those documented in the extant literature. A key feature of our analysis is that a ‘business stealing’ effect (Mankiw & Whinston, 1986) does not arise for the relatively cost‐efficient entrant under managerial delegation. The policy implication emerging from our analysis suggests that entry should be encouraged in industries with strategic managerial delegation, cost asymmetry and not large‐scale economies.

  December 14, 2013   doi: 10.1111/1475-4932.12079   open full text
• Economic Inequality in Australia between 1983 and 2010: A Stochastic Dominance Analysis.
  Ma. Rebecca Valenzuela, Hooi Hooi Lean, George Athanasopoulos.
  Economic Record. December 14, 2013
  We employ stochastic dominance (SD) analysis on Australian unit records to investigate trends in inequality and relative welfare levels in Australia from 1983 to 2010. Using both income and expenditure distributions, we found that the economy was on a steady descent towards greater inequality between 1983 and 1993, and that this was followed by a 10‐year period of recovery and growth, and gradual improvements in inequality levels. The economy's path to sustainable and equitable growth carried on towards the late 2000s, but this was interrupted by the 2007–08 global financial crisis which caused income inequality levels to deteriorate. Our SD tests show that the country's tax and transfer programmes have been consistent in moderating elevated levels of inequities observed in incomes over time, particularly in periods following economic contraction. Our subgroup results also show strong evidence of long‐term disparities in the relative welfare levels of male‐headed over female‐headed households, of households with children over those without, and of couple‐parents families over their single‐parent counterparts.

  December 14, 2013   doi: 10.1111/1475-4932.12081   open full text
• Squeezed in and squeezed out: the effects of population ageing on the demand for housing.
  Andrew Coleman.
  Economic Record. December 14, 2013
  This article examines how increasing longevity affects the housing choices of working age and retired people using a heterogeneous agent overlapping generations model that incorporates owner‐occupier and rental sectors, credit constraints, detailed tax regulations and a housing supply sector. Increasing longevity generally leads to declining home ownership rates among young people, with bigger declines if the government increases taxes and pensions rather than relying on additional private provision of retirement income. The model suggests raising tax rates to provide pensions can reduce the welfare of all agents, even those who are net beneficiaries, because they tighten credit constraints on young people.

  December 14, 2013   doi: 10.1111/1475-4932.12080   open full text
• City Relative Price Dynamics in Australia: Are Structural Breaks Important?*.
  Hiranya K. Nath, Jayanta Sarkar.
  Economic Record. October 24, 2013
  This paper examines the dynamic behaviour of relative prices across seven Australian cities by applying panel unit root test procedures with structural breaks to quarterly consumer price index data for 1972 Q1–2011 Q4. We find overwhelming evidence of convergence in city relative prices. Three common structural breaks are endogenously determined at 1985, 1995, and 2007. Further, correcting for two potential biases, namely Nickell bias and time aggregation bias, we obtain half‐life estimates of 2.3–3.8 quarters that are much shorter than those reported by previous research. Thus, we conclude that both structural breaks and bias corrections are important to obtain shorter half‐life estimates.

  October 24, 2013   doi: 10.1111/1475-4932.12077   open full text
• Quality–Price Competition and Product R&D Investment Policies in Developing and Developed Countries.
  Yasunori Ishii.
  Economic Record. September 13, 2013
  This study establishes a third‐country trade model where firms from developing and developed countries invest into product R&D under their governments' subsidisation policies to analyse firms' quality–price choices and governments' optimal product R&D investment policies. We show that a rise in the developing (developed) country's product R&D subsidy makes firms' quality–price competition more (less) intense and that the governments' optimal product R&D policies, depending on the features of their quality and demand functions, can both be subsidies even under Bertrand price competition, contrary to the findings of previous studies.

  September 13, 2013   doi: 10.1111/1475-4932.12076   open full text
• Does Coordination of Welfare Services Delivery Make a Difference for Extremely Disadvantaged Jobseekers? Evidence from the ‘YP4’ Trial.
  Jeff Borland, Yi‐Ping Tseng, Roger Wilkins.
  Economic Record. July 29, 2013
  Fragmented welfare service delivery has been identified as a significant barrier to improving outcomes for highly disadvantaged populations. The YP4 trial, conducted from 2005 to 2009, sought to evaluate, by randomised control method, an approach proposed by Campbell et al. (2003) for integrating delivery of employment, housing, health and other services for young homeless jobseekers. Rather than providing extra access to services or utilisation of different services, the YP4 trial involved assignment of a case manager to tailor and coordinate available services to reflect the specific circumstances of young homeless jobseekers. We find that the YP4 program did not have a significant effect on economic or psychological well‐being, a finding that is robust to application of experimental and quasi‐experimental methods. It is argued that our study contributes to knowledge on programme design, particularly in relation to the importance of the scale of intervention and programme administration.

  July 29, 2013   doi: 10.1111/1475-4932.12062   open full text
• The Determinants of RBA Target Rate Decisions: A Choice Modelling Approach.
  Lee A. Smales.
  Economic Record. July 27, 2013
  This article examines the determinants of Reserve Bank of Australia (RBA) target rate decisions in the period following the introduction of inflation targeting (1993–2012). A choice modelling approach reveals asymmetry in RBA policy such that the RBA is more concerned about inflation rising above the target band, and the threshold for cutting rates is greater than that required to hike rates. While there is evidence of the RBA following mandated objectives, the likelihood of rate reductions has increased following the appointment of Glenn Stevens, although his term as Governor has coincided with extraordinary economic conditions.

  July 27, 2013   doi: 10.1111/1475-4932.12063   open full text
• The Impact of Fertility on Mothers' Labour Supply in Australia: Evidence from Exogenous Variation in Family Size.
  Julie Moschion.
  Economic Record. July 16, 2013
  This paper estimates the impact of fertility on mothers' labour supply in Australia, using exogenous variation in family size generated by twin births and the gender mix of siblings. Results show that having more than one child decreases mothers' labour market participation by 12 percentage points and hours worked by around four hours per week. Having more than two children reduces labour market participation by 12 percentage points and hours worked by three hours a week. Compared with other countries, the effects for Australia are large.

  July 16, 2013   doi: 10.1111/1475-4932.12042   open full text
• Macroeconomic and Welfare Effects of the 2010 Changes to Mandatory Superannuation.
  George Kudrna, Alan D. Woodland.
  Economic Record. July 10, 2013
  This study examines the macroeconomic and welfare effects of the reform to mandatory superannuation announced by the Australian government in 2010, which includes gradual increases in mandatory contributions and the effective removal of the contribution tax for low‐income workers. We find significantly larger superannuation assets and lower age pension expenditures. The reform has positive impacts on households’ long‐run welfare, with higher‐income households benefiting from the increased contributions and lower‐income households gaining from the contribution tax removal. The reform yields an aggregate efficiency gain of $11,753 per capita in initial resources for each future generation.

  July 10, 2013   doi: 10.1111/1475-4932.12061   open full text
• The Gender Pay Gap in the Australian Private Sector: Is Selection Relevant Across the Earnings Distribution?
  Yekaterina Chzhen, Karen Mumford, Catia Nicodemo.
  Economic Record. July 03, 2013
  We use quantile regression and counterfactual decomposition methods to explore gender gaps across the earning distribution for a sample of full‐time employees in the Australian private sector. Significant evidence of a self‐selection effect for the women into full‐time employment (or of components of self‐selection related to observable or unobservable characteristics) is, interestingly, not found to be relevant in the Australian context. Substantial gender earnings gaps (and glass ceilings) are established, however, with these earnings gaps found to be predominantly related to the women receiving lower returns to their observable characteristics than the men.

  July 03, 2013   doi: 10.1111/1475-4932.12060   open full text
• The Impact of Paid Maternity Leave Rights on Labour Market Outcomes.
  Barbara Hanel.
  Economic Record. July 02, 2013
  I estimate the effect of paid maternity leave on mothers probability of employment after birth, how this effect varies with the age of the child, and the effect on wages when the child is about four years old. A statistical matching approach is applied. The matching procedure controls for an extensive range of pre‐birth job characteristics, health and human capital measures, and attitudes towards non‐maternal care. Mothers appear to delay their return to work after a birth if they are entitled to paid maternity leave, but the delay is short and does not affect wages in the long‐run.

  July 02, 2013   doi: 10.1111/1475-4932.12057   open full text
• The New National Quality Framework: Quantifying Some of the Effects on Labour Supply, Child Care Demand and Household Finances for Two‐Parent Households.
  Robert V. Breunig, Xiaodong Gong, Declan Trott.
  Economic Record. July 02, 2013
  New regulations to improve the quality of early childhood education and care came into force in Australia in 2012. Using a simultaneous, structural model of labour supply and child care demand we predict the effects on the labour supply of partnered women, on demand for child care and on household finances for two‐parent households in Australia. Using estimated cost impacts of this new National Quality Framework from government and non‐government sources, we find modest effects on household behaviour. For a mid‐range cost scenario, we find that partnered women's labour force participation will decrease by just over one‐half of one percentage point, a change of less than 1 per cent. Working hours for partnered women decrease by 20 minutes or approximately 2 per cent. Household disposable income decreases by $12.50, a 0.6 per cent decrease. Given widespread agreement about the benefits of investing in children, these quantitatively small effects for two‐parent households strengthen the case for the National Quality Framework.

  July 02, 2013   doi: 10.1111/1475-4932.12059   open full text
• An Equilibrium Model of General Practitioner Payment Schemes.
  Donald J. Wright.
  Economic Record. July 01, 2013
  In an environment where GPs are of differing quality and heterogeneous patients have different preferences for quality, it is shown that fee‐for‐service coupled with balance billing is a superior payment scheme to just fee‐for‐service or capitation payments as it generates an efficient allocation of GPs between high and low quality and an efficient allocation of patients between GPs. Where patients have more than one condition it is shown that fee‐for‐service allows patients to seek treatment from GPs of differing quality conditional on the medical condition they have.

  July 01, 2013   doi: 10.1111/1475-4932.12058   open full text
• Postcode‐Level House Price Models for Banking and Insurance Applications.
  Katja Hanewald, Michael Sherris.
  Economic Record. June 21, 2013
  This article develops and compares residential property price models required for banking and insurance applications including pricing, risk management and portfolio management. Our study is based on postcode‐level house prices for Sydney over the period 01–1979 to 03–2011. The estimation results of single‐factor panel data models show that the market‐wide house price index explains between 42 per cent and 44 per cent of the longitudinal and cross‐sectional variation in postcode‐level house price growth rates. Macroeconomic and financial variables, as well as geographic and sociodemographic postcode characteristics are confirmed as important factors for pricing and risk management of products exposed to house price risk.

  June 21, 2013   doi: 10.1111/1475-4932.12045   open full text
• Job Mismatches and Labour Market Outcomes: Panel Evidence on University Graduates.
  Kostas Mavromaras, Seamus McGuinness, Nigel O'Leary, Peter Sloane, Zhang Wei.
  Economic Record. June 21, 2013
  The interpretation of graduate mismatch manifested either as over‐education or as over‐skilling remains problematical. This article analyses the relationship of educational and skills mismatch with pay, job satisfaction and job mobility using unique data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. Over‐education and over‐skilling are found to be distinct phenomena and their combination results in the most severe negative labour market outcomes. Using panel methodology reduces strongly the size of many relevant coefficients, questioning previous cross‐sectional results in the literature. The article shows that the relationship between mismatch and labour market outcomes is strongly influenced by unobserved heterogeneity.

  June 21, 2013   doi: 10.1111/1475-4932.12054   open full text
• How Do Stamp Duties Affect the Housing Market?
  Ian Davidoff, Andrew Leigh.
  Economic Record. June 21, 2013
  Land transfer taxes are a substantial portion of the cost of moving house in many developed countries. Because stamp duties are endogenous with respect to the house price, we create an instrumental variable that is the stamp duty on a property, based on the starting house price in the relevant postcode and the national house price trend. In a specification with postcode and year fixed effects, this instrument effectively captures policy changes and non‐linearities in the stamp duty schedule. We find that the impact of an increase in the tax rate is to lower house prices suggesting that the economic incidence of the tax falls on the seller. We also observe impacts of stamp duty on housing turnover. A 10 per cent increase in stamp duty lowers turnover by 3 per cent in the first year, and by 6 per cent if sustained over a 3‐year period.

  June 21, 2013   doi: 10.1111/1475-4932.12056   open full text
• Modelling the Relationship between Child Abuse and Long‐Term Health Care Costs and Wellbeing: Results from an Australian Community‐Based Survey.
  Rebecca Reeve, Kees Gool.
  Economic Record. June 20, 2013
  Childhood abuse is a serious social and economic problem. In Australia, there are 17,000 substantiated cases of physical and sexual child abuse each year. We model the relationship between childhood abuse and long‐term health, health care costs and well being using data from the 2007 National Survey of Mental Health and Wellbeing. We find that adults with a history of childhood abuse suffer from significantly more health conditions, incur higher annual health care costs and are more likely to harm themselves. Our results suggest that child abuse has long‐lasting economic and welfare costs. The costs are greatest for those who experienced both physical and sexual abuse.

  June 20, 2013   doi: 10.1111/1475-4932.12044   open full text
• Factors that Determine the Decline in University Student Enrolments in Economics in Australia: An Empirical Investigation.
  John Marangos, Vasiliki Fourmouzi, Minoas Koukouritakis.
  Economic Record. June 18, 2013
  This study attempts to determine empirically the factors that influence enrolments in economics and business based on data from a panel of Australian universities. Using a two‐equation dynamic reduced‐form system, our results indicate the following: past year enrolments in a certain field of study have the highest impact on that field of study; in periods of recession enrolments favour economics; female enrolments favour business studies over economics; an increase in total enrolments has a small negative effect on economics enrolments; and finally, there is a positive impact of the eight leading Australian universities (‘Group of Eight’) on economics enrolments.

  June 18, 2013   doi: 10.1111/1475-4932.12038   open full text
• Technical Change, Efficiency Change and Institutions: Empirical Evidence for a Sample of OECD Countries.
  Sara Barcenilla‐Visús, José‐María Gómez‐Sancho, Carmen López‐Pueyo, María‐Jesús Mancebón, Jaime Sanaú.
  Economic Record. June 18, 2013
  This study measures the total factor productivity (TFP) of 15 OECD countries in the period 1989–2004 and disaggregates it into its two components: technical change and efficiency change. Subsequently, two theoretical models are estimated to evaluate the effects that technology and institutions have on technical change and on efficiency change. The results show that technology, proxied by domestic R&D stocks or by patents, stimulated the variation in technical change and in efficiency change. In contrast, the reduction of entry barriers and of the relative weight of publicly owned companies, or deregulation in the telecommunications sector, drove technical change but, at the same time, slowed efficiency change.

  June 18, 2013   doi: 10.1111/1475-4932.12019   open full text
• Private Health Insurance Status and Utilisation of Dental Services in Australia*.
  Sandra Hopkins, Michael P. Kidd, Aydogan Ulker.
  Economic Record. June 18, 2013
  This article focuses on the relationship between private insurance status and dental service utilisation in Australia using data between 1995 and 2001. This article employs joint maximum likelihood to estimate models of time since last dental visit treating private ancillary health insurance (PAHI) as endogenous. The sensitivity of results to the choice between two different but related types of instrumental variables is examined. We find robust evidence in both 1995 and 2001 that individuals with a PAHI policy make significantly more frequent dental consultations relative to those without such coverage. A comparison of the 1995 and 2001 results, however, suggests that there has been an increasing role of PAHI in terms of the frequency of dental consultations over time. This seems intuitive given the trends in the price of unsubsidised private dental consultations. In terms of policy, our results suggest that while government measures to increase private health insurance coverage in Australia have been successful to a significant degree, that success may have come at some cost in terms of socio‐economic inequality as the privately insured are provided much better access to care and financial protection.

  June 18, 2013   doi: 10.1111/1475-4932.12040   open full text
• Gasoline Price Cycles Under Discrete Time Pricing.
  Nicolas de Roos, Hajime Katayama.
  Economic Record. June 18, 2013
  We characterise petrol pricing dynamics in an unusual policy environment. A timing restriction in the Western Australian market imposes discrete time pricing on petrol retailers, enabling us to observe the exact timing of price changes. We employ a Markov‐switching regression model, finding the existence of Edgeworth price cycles of a similar nature to those recently observed in some other retail petrol markets. Cycles are frequent, asymmetric and of substantial amplitude. Importantly, firms change prices almost every period, limiting the relevance of the leading theory of Edgeworth cycles due to Maskin and Tirole (). We also discuss episodes of disruption and evolution of the price cycle.

  June 18, 2013   doi: 10.1111/1475-4932.12036   open full text
• Bank and Official Interest Rates: How Do They Interact over Time?
  G. C. Lim, Sarantis Tsiaplias, Chew Lian Chua.
  Economic Record. June 18, 2013
  This study implements a procedure to evaluate time‐varying bank‐interest rate adjustments over a sample period which includes changes in industry structure, market and credit conditions and varying episodes of monetary policy. The model draws attention to the pivotal role of official rates and provides estimates of a bank equilibrium policy rate. The changing sensitivity of official rates to banking conditions is identified. Results are also provided for the variation in intermediation margins and pass‐throughs as well as the interactions between lending and borrowing behaviour over the years, including behaviour before, during and after the global financial crisis. The empirical methodology is applied to the US and the Australian banking systems.

  June 18, 2013   doi: 10.1111/1475-4932.12030   open full text
• Terms of Trade Shocks: What Are They and What Do They Do?
  Jarkko P. Jääskelä, Penelope Smith.
  Economic Record. June 18, 2013
  This article describes and quantifies the macroeconomic effects of different types of terms of trade shocks and their propagation in the Australian economy. Three types of shocks are identified based on their impact on commodity prices, global manufactured prices and global economic activity. The first two shocks, a world demand shock and a commodity‐market‐specific shock, are fairly standard. The third shock, a globalisation shock that may result, for instance, from the increasing importance of China, India and eastern Europe in the global economy, is more novel. The globalisation shock is associated with a decline in manufactured prices, a rise in commodity prices and an increase in global economic activity. Determining the underlying source of variation in the terms of trade is shown to be important for understanding the impact on the Australian economy as all three shocks propagate through the economy in different ways. The relative contribution of each shock to inflation, output, interest rates and the exchange rate has also varied over time. The main conclusion of the article is that a higher terms of trade tends to be expansionary but is not always inflationary. A key result is that the floating exchange rate has provided an important buffer to the external shocks that move the terms of trade.

  June 18, 2013   doi: 10.1111/1475-4932.12039   open full text
• Predicting the ‘Global Financial Crisis’: Post‐Keynesian Macroeconomics.
  Steve Keen.
  Economic Record. January 24, 2013
  The ‘Global Financial Crisis’ is widely acknowledged to be a tail event for neoclassical economics (Stevens, 2008), but it was an expected outcome for a range of non‐neoclassical economists from the Austrian and post‐Keynesian schools. This article provides a survey of the post‐Keynesian approach for readers who are not familiar with this literature. It will briefly cover the history of how post‐Keynesian economics came to diverge so much from the neoclassical mainstream, and focus on post‐Keynesian macroeconomics today and its alternative indicators of macroeconomic turbulence.

  January 24, 2013   doi: 10.1111/1475-4932.12016   open full text
• Means‐Tested Public Pensions, Portfolio Choice and Decumulation in Retirement*.
  Hardy Hulley, Rebecca Mckibbin, Andreas Pedersen, Susan Thorp.
  Economic Record. January 10, 2013
  Age Pension means‐testing buffers retired households against shocks to wealth and may influence decumulation patterns and portfolio allocations. Simulations from a simple model of optimal consumption and allocation strategies for a means‐tested retired household indicate that, relative to benchmark, eligible and near‐eligible households should optimally decumulate faster, and choose more risky portfolios, especially early in retirement. Empirical modelling of a Household, Income and Labour Dynamics in Australia panel of pensioner households confirms a riskier portfolio allocation by wealthier retired households. Poorer pensioner households decumulate at around 5 per cent p.a. on average; however, better‐off households continue to add around 3 per cent p.a. to wealth, even when facing a steeper implicit tax rate on wealth.

  January 10, 2013   doi: 10.1111/j.1475-4932.2012.12002.x   open full text