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Featured researches published by Colm Kearney.


Journal of Macroeconomics | 1990

Fiscal policy and current account performance: International evidence on the twin deficits☆

Colm Kearney; Mehdi S. Monadjemi

Abstract Divergent predictions about the twin deficits relationship, which links the stance of fiscal policy to the current account balance, continue to emanate from variously specified theoretical models of the open economy. This paper utilizes the vector autoregressive (VAR) technique to examine the international evidence from eight countries on quarterly data over the recent period of floating exchange rates from 1972:i–1987:iv. The evidence is consistent with a temporary twin deficits relationship that is not invariant to the governments financing decision and does not persist over time.


Economics Letters | 1987

On the specification of granger-causality tests using the cointegration methodology

Ronald MacDonald; Colm Kearney

The application of Granger-causality tests to macroeconomic time series frequently necessitates filtering the data to induce stationarity. If the relevant variables are cointegrated, Granger-causality tests are misspecified if applied in standard vector autoregressive format to differenced data. A common application is illustrated.


Applied Economics | 1997

Inflation and economic growth: a multi-country empirical analysis

Satya Paul; Colm Kearney; Kabir Chowdhury

The world eocnomy is currently adjusting to a low inflation regime which has implicastions for the cross-country distribution of world growth opportunities. In contrast to previous related work which assumes unidirectional causality, this paper uses the Granger methodology to examine both the direction and pattern of causality between inflation and economic growth in 70 countries using annual data over the period 1960-89. Among the conclusions are that first, the relationship between inflation and growth is non-uniform across countries: 40% of countries studied reveal no causality, one-third exhibit unidirectional causality and about one-fifth of countries show bidirectional causality, second, a vast majority of countries which show either uni- or bi-directional causality beong to the industrial group, and third, the low world inflation regime will on balance redistribute real growth opportunities benefit away from the developing countries towards the industrialized countries.


European Economic Review | 1986

Intervention and sterilisation under floating exchange rates: The UK 1973–1983

Colm Kearney; Ronald MacDonald

In this paper a small portfolio balance model, in the spirit of Obstfeld (1983), is estimated for the sterling pound-US dollar exchange rate, over the period 1973 quarter 2 to 1983 quarter 4. It is demonstrated inter alia, that pure, or sterilised, foreign exchange market intervention can be effective, even when agents form expectations rationally.


Journal of International Money and Finance | 1991

The interest rate neutrality of fiscal deficits: testing for Ricardian equivalence and capital inflow

Mehdi S. Monadjemi; Colm Kearney

Abstract This paper examines the extent to which the Ricardian equivalence theorem as restated by Barro (1974) and the capital inflow hypothesis of Dwyer (1985) provide valid explanations of the observed interest rate neutrality of fiscal policy in open economies. A theoretical open-economy macromodel is specified and subsequently tested on a multi-country dataset which spans the recent period of floating exchange rates. On balance, the empirical results favour the capital inflow hypothesis which emphasizes the importance of international financial integration in facilitating the financing of public deficits by the savings of agents who reside across political frontiers.


Review of World Economics | 1986

A structural portfolio balance model of the Sterling-Dollar exchange rate

Colm Kearney; Ronald MacDonald

ZusammenfassungEin Strukturmodell des vermögenstheoretischen Ansatzes zur ErklÄrung des Pfund-Dollar-Wechselkurses. — In diesem Aufsatz wird eine Variante des vermögenstheoretischen Ansatzes zur Bestimmung des Wechselkurses in seiner Strukturform auf den Pfund-Dollar-Kurs des Zeitraums 1973–1982 angewandt. Dabei wird die Methodologie von Brainard und Tobin benutzt, wodurch sichergestellt wird, da die Koeffizienten bestimmten Restriktionen genügen. GeschÄtzt wird das Modell sowohl mit der Kleinst-Quadrate-Methode als auch mit dem Theil-Goldberger-Verfahren der gemischten SchÄtzungen. Mehrere Aktiva-Schocks werden simuliert und die Reaktionen der ZinssÄtze und der Wechselkurse aufgezeigt.RésuméUn modèle structurel de «portfolio balance» du taux de change Sterling-Dollar.- Dans cet article les auteurs appliquent la structure d’une version de l’approche de «portfolio balance» à la détermination du taux de change sterling-dollar sur la période 1973–1982. Dans le modèle, la méthodologie de Brainard et Tobin est utilisée qui garantit que les restrictions nécessaires d’addition sont satisfaites. Les méthodes des moindres carrés ordinaires aussi bien que les procédures d’estimation mixte de Theil-Goldberger sont appliquées pour estimer le modèle. Les auteurs simulent un nombre des chocs d’actif et illustrent la réponse des taux d’intérÊt et du taux de change.ResumenUn modelo «portfolio balance» estructural del tipo de cambio entre la libra esterlina y el dólar. - En este trabajo se presenta una versión del modelo de «portfolio balance» para determinar el tipo de cambio, que es implementado estructuralmente para el tipo libra esterlina - dólar en el período 1973–1982. En la implementación de este modelo se utiliza la metodología de Brainard y Tobin, que garantiza la consistencia de las restricciones. Con el fin de estimar el modelo se aplica tanto el método de cuadrados mínimos como también el método mixto de Theil y Goldberger. Se llevan a cabo varias simulaciones a base de shocks de activos para ilustrar la reacción de las tasas de interés y del tipo de cambio.


Economic Analysis and Policy | 1987

Macroeconomic Policy and the Balance of Payments in Australia

Colm Kearney; Lesley Fallick

The current stance of macroeconomic policy in Australia is designed to secure improved performance in the economy’s balance of international payments. The paper examines key aspects of this policy stance. It argues that reliance on the J-curve effect of exchange rate depreciation together with tight fiscal policy will not deliver permanently improved trade performance unless accompanied by industrial initiatives aimed at improving the economy’s structural weaknesses.


Journal of The Asia Pacific Economy | 1996

International financial integration: Measurement and policy implications

Colm Kearney

Abstract This paper overviews work on the definition, measurement and implications of international financial integration. It first reviews the international parity relationships and three measures of the degree of international financial integration: namely, the savings‐investment correlation measure, the equalization of rates of return measure and the international capital market completeness measure. It points to the benefits of free international mobility of financial assets, including the facilitation of obtaining the gains from commodity and services trade, reducing risk, enabling the financing of high return investments and smoothing international consumption. It also points out the side effects including the relative effectiveness of alternative stabilization policies and their effects on savings and income distribution through their effects on the tax system. It concludes that free capital mobility is not a primal source of economic instability and policies aimed at restricting the free internati...


Australian Economic Papers | 1990

RATIONAL EXPECTATIONS, BUBBLES AND MONETARY MODELS OF THE EXCHANGE RATE: THE AUSTRALIAN/US DOLLAR RATE DURING THE RECENT FLOAT*

Colm Kearney; Ronald MacDonald


Australian Economic Papers | 1990

Consumption, Cointegration and Rational Expectations: Some Australian Evidence

Ronald MacDonald; Colm Kearney

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Kabir Chowdhury

University of New South Wales

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Mehdi S. Monadjemi

University of New South Wales

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Satya Paul

University of Western Sydney

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Graham Elliott

Reserve Bank of Australia

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John Hillier

University of New South Wales

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Kevin James Daly

University of Western Sydney

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