Economics - Research Publications
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ItemAn employment equation for Australia: 1966-2001( 2004-01)We model the relationship between hours of work and employment and argue thatunless actual hours are varying with a change in ‘standard hours’, actual hours shouldnot appear in the long-run component of an equation for employment. If howeverstandard hours are changing then it is desirable that this variable be incorporated intothe employment equation. Our theoretical model yields an expression for the elasticityof employment with respect to standard hours which shows that the elasticity isrelated to the size of the premium for overtime. Using quarterly data for the period1966:3 – 2001:3 we estimate a new employment equation for Australia incorporatingstandard hours of work. We find empirical support for our approach and we providenew estimates of the elasticity of employment with respect to the real wage and GDP.We also find a marked asymmetry in the response of employment to variations in realGDP and real wages in recession periods as against non-recession periods.
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ItemBudget balance and trade balance: kin or strangers. A case study of Taiwan( 2004-01)In line with the deterioration of Taiwanese budget deficits, the trade surplus has alsodecreased. It is the ideal time to investigate the relationship between budget balances andtrade balances. Unit root tests, cointegration tests, Granger causality tests and the VARsmodel are techniques used to test the Keynesian proposition and the Ricardianequivalence. The main findings are that Keynesian proposition is supported only by themodel using data of the whole period. There is no support for the Ricardian equivalence.That budget balances and trade balances being kin or strangers varies over periods of dataused.
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ItemStochastic growth with nonconvexities: the optimal case( 2004-02)This paper studies optimal investment and dynamicbehaviour of stochastically growing economies. We assume neitherconvex technology nor bounded support of the productivity shocks.A number of basic results concerning the investment policy and theRamsey–Euler equation are established. We also prove a fundamentaldichotomy pertaining to optimal growth models perturbedby standard econometric shocks: Either an economy is globallystable or it is globally collapsing to the origin.
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ItemAsymptotic statistical properties of the neoclassical optimal growth model( 2004-02)The standard one-sector stochastic optimal growthmodel is shown to be not just ergodic but geometrically ergodic.In addition, it is proved that the time series generated by the optimalpath satisfy the Law of Large Numbers and the Central LimitTheorem.
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ItemEquivalent conditions for irreducibility of discrete time Markov chains( 2004-02)We consider discrete time Markov chains on generalstate space. It is shown that a certain property referred to hereas nondecomposability is equivalent to irreducibility, and that aMarkov chain with invariant distribution is irreducible if and only ifthe invariant distribution is unique and assigns positive probabilityto all absorbing sets.
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ItemThe incidence of long-term unemployment in Australia 1978-2003( 2004-05)This paper explores the following question - Has there been any long-run increase (ordecrease) in the ‘incidence’ of long-term unemployment once we have corrected for cyclicalfactors? Our research leads us to conclude: (i) that the incidence of male long-termunemployment has been neither rising nor falling, once we allow for ‘cyclical factors’ and,(ii) that the incidence of female long-term unemployment has been rising, once we allow for‘cyclical factors’. We conjecture that there is a link between increasing female participation(which we take to be a proxy for ‘attachment to the labour market’ – and thus attachment tounemployment as well as employment) and an increasing incidence of long-termunemployment. Experimenting with policy dummies, we find no evidence of policy effects onthe incidence of long-term unemployment in the case of males and females but there is someevidence that policy had temporary effects on females.
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ItemInternational food safety standards and processed food exports: issues of firm-level analysis( 2004-05)A revised version of a paper prepared for the Thammasat University-ACIAR Workshop“International Food Safety Standards and Processed Food Exports from India and Thailand”Bangkok, Thailand, 19th March 2004
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ItemStochastic optimal growth when the discount rate vanishes( 2004-07)It has been shown that long-run optimality of thelimit of discounted optima when the discount rate vanishes is impliedby a condition on the value function of the optimal program.We suggest a new method to verify this condition in the contextof one-sector optimal growth. The idea should be more widelyapplicable.
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ItemDynamic ecological constraints to economic growth( 2004-08)An important characteristic defining the threat of environmentalcrises is the uncertainty about their consequences for future welfare.Random processes governing ecosystem dynamics and adaptation toanthropogenic change are the source of prevailing ecological uncertaintyand contribute to the problem of how to balance economic developmentagainst natural resource conservation. The aim of this study isto describe the implications for steady-state economic growth subjectto non-linear dynamic environmental constraints. In a two-sector exogenousgrowth framework we model a stochastic environmental good,exhibiting uncertain ecological responses to environmental change anddescribe the economic and environmental trade-offs that ensue for arisk-averse social planner. Allowing for ecological risk tends to slowlong run economic growth if environmental impacts are assumed toincrease exponentially as the level of disturbance increases. A combinationof low risk aversion and linear or concave ecological responsefunctions leads to accelerated economic growth and environmental impact.This result is reversed for social planners characterised by highlevels of risk aversion as conservation with zero environmental impactbecomes the economically optimal policy choice. The environmentaloption value of preserving a natural resource in the face of uncertaintyis treated in this paper as a Cicchetti-Freeman type risk premium.
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ItemA framework for understanding changes in the unemployment rate in a flows context: an examination net flows in the Australian labour market( 2004-08)In this paper we develop a framework which is appropriate for the systematic investigation ofthe relationship between net (and gross) flows between different labour market states andmovements in the unemployment rate. We use that framework to investigate the behaviour ofnet flows of persons between employment, unemployment and not in the labour force inAustralia between 1979-2003 and the relationship of these flows to changes in theunemployment rate over that period. We find that: flows from unemployment to employmentexceed flows from employment to unemployment and that this is the case even in recessions;flows from employment to not in the labour force exceed flows from not in the labour force toemployment and that this is the case even in booms, and; flows from not in the labour force tounemployment exceed flows from unemployment to not in the labour force even inrecessions. Another important finding is that the reason why the participation rate isnegatively correlated with the unemployment rate is because net flows from employment toboth unemployment and to not in the labour force are highly correlated. It cannot be explainedby flows occurring between unemployment and not in the labour force.