Neil Dias Karunaratne

Macro-Economic Determinants of Australia's Current Account, 1977-1986

ZusammenfassungMakroökonomische Bestimmungsgründe für Australiens Zahlungsbilanz 1977–1986. - In dieser Studie wird versucht, die wichtigsten makroökonomischen Bestimmungsgründe für Australiens Zahlungsbilanzdefizit wÄhrend der Periode des Crawlingpeg und der floatenden Wechselkurse zwischen 1977 und 1986 zu ermitteln. Die empirischen Ergebnisse zeigen, da▾ trotz ziemlich schneller Anpassung (worauf die geringe Diskrepanz zwischen den Koeffizienten im Ungleichgewichts- und im Gleichgewichtsmodell hindeuten) ein fundamentales Ungleichgewicht in Australiens Zahlungsbilanz besteht, das hauptsÄchlich vom Terms-of-trade-Schock und vom internen Schock gro▾er Staatsausgaben herrührt. Auch unter dem Regime flexibler Wechselkurse trugen weder die realen Wechselkurse noch die realen Zinsen in statistisch signifikanter Weise zur ErklÄrung des Defizits bei. Ein auf mittlere Sicht haltbares Zahlungsbilanzziel lÄ▾t sich erreichen, wenn die Industrie umstrukturiert wird und ArbeitsmarktrigiditÄten beseitigt werden, die mit floatenden Wechselkursen unvereinbar sind.RésuméMacro-déterminants du compte courant de l’Australie en 1977–1986. - Dans cet article une taxonomie des déterminants principaux macro-économiques du déficit en compte courant de l’Australie pendant le régime de “crawling peg” et de taux de change flottant entre 1977 et 1986 est essayée. Les résultats empiriques révèlent qu’en dépit d’un ajustement assez rapide - comme suggéré par la petite différence entre les coéfficients du modèle déséquilibre et équilibre — un déséquilibre fondamental reste dans le compte courant de l’Australie qui résulte principalement du choc en termes d’échange et du choc interne des grandes dépenses gouvernementales. En dépit du régime de taux de change flexible ni le taux de change réel ni le taux d’intérÊt réel ne peuvent pas expliquer le déficit statistiquement significativement. La réalisation d’un but de compte courant soutenable en terme moyen est prévue s’il y a une restructuration de l’industrie et une réduction des rigidités sur le marché de main d’oeuvre qui ne sont pas compatibles avec le régime de taux de change flottant.ResumenDeterminantes macroeconómicos de la cuenta corriente de Australia (1977–1986). - En este trabajo se intenta realizar una taxonomía de las determinantes macroeconómicas más importantes del déficit de cuenta corriente de Australia durante el régimen de cambio de “crawling peg” y flotante en la década 1977–1986. Los resultados empíricos revelan que a pesar de un ajuste bastante rápido, sugerido por la pequeña discrepancia entre los coeficientes del modelo de desequilibrio y de equilibrio, aÚn persiste en Australia un desequilibrio fundamental en el déficit de la cuenta corriente que tiene su origen especialmente en el shock externo de términos de intercambio y en el shock interno proveniente del alto gasto pÚblico. A pesar del régimen de cambio flexible ni la tasa de cambio real ni la tasa de interés real resultaron ser determinantes del déficit estadísticamente significantes. La realización de una meta de cuenta corriente sostenible en el mediano plazo dependerá de la reestructuración industrial y de la superación de las rigideces del mercado laboral que son incongruentes con el régimen de tasa de cambio flotante.

EXPORTS AND ECONOMIC GROWTH IN BANGLADESH: Has Manufacturing Exports Become a New Engine of Export-Led Growth?

This article empirically verifies the export-led growth hypothesis for Bangladesh and examines whether manufacturing exports have become a new engine of the export-led growth in Bangladesh, replacing the total exports-engine, as claimed by the so called de novo hypothesis. The empirical assessment based on the vector error correction modeling (VECM) that uses quarterly data over the period 1974–1999 suggests that both total exports and manufacturing exports have had positive and statistically significant impacts both in the long run and the short run. But an encompassing test in conjunction with the various non-nested tests suggests that total exports, as opposed to manufacturing exports in isolation, is the dominant engine of the export-led growth. This refutes the claim that manufacturing exports has become the sole determinant of the export-led growth in Bangladesh.

Growth and Trade Dynamics Under Regime Shifts in Australia

Uses parametric Granger causality techniques to test whether trade acted as an engine of growth during the period 1971(2)‐1994(2) in Australia. The causality tests were performed on time‐series data that were filtered after unit root and cointegration testing. During the study period there was a dramatic shift from a protectionist to a more liberal trading regime in Australia. Superexogeneity tests were applied to the conditional growth and the marginal trade policy models derived by the application of general to specific methodology. The superexogeneity tests examined whether the shift from a protectionist to a more liberal trading regime in the mid‐1980s undermined the structure of Australian trade growth dynamics as foreshadowed in the Lucas critique. Reviews the macropolicy implications of the trade policy regime shift.

High-Tech Innovation, Growth and Trade Dynamics in Australia

In this paper the macro-economic interactions between high-tech innovation (telecommunications), growth and trade are analysed at the macroeconomic level. Cointegration and innovation accounting based on vector autoregression techniques have been used to estimate empirically the trade and growth dynamics in the Australian context. The paper reviews the high-tech innovation induced policy regime shifts such as the deregulation of telecommunications and the liberalisation of trade and also quantifies trade and growth dynamics.

An Input-Output Approach to the Measurement of the Information Economy

This study presents a set of methods based on input-output analysis to measure the size and structure of a countrys information economy. Published current national data bases do not identify even the broad contours of a countrys information economy. The methodology which is stylised algebraically using input-output modelling unravels the latent information economy. Both the primary or marketed information activities and the non-marketed or secondary information activities are measured. The interdependencies of the primary and secondary information sectors with the non-information sectors such as agriculture and manufacturing are examined. Linkages and multipliers are also calculated using consistent approaches. Finally, the methodology is empirically validated using Australia as a case-study and the results are discussed.

An Input-Output Analysis of Australian Energy Planning Issues

The belief that the price mechanism can be used exclusively to combat problems arising from growing energy shortages has led to the neglect of the repercussions of energy conservation on the macroeconomic problems of growth and development. Moreover, many studies consider only the direct effects of energy use and concentrate on petroleum shortages, so underestimating the total repercussion and structural dependence associated with changes in energy demand in Australia. This study attempts to overcome these gaps by modifying input-output modelling to estimate all primary energy demand for fossil fuels in Australia. The complex interactions between energy conservation and macroeconomic goals are investigated at sectoral levels. The optimal sectors that meet macroeconomic goals and energy constraints simultaneously have been identified using simple, but powerful, analytical tools. The tradeoffs between energy use and macroeconomic objectives are quantified using energy as a numeraire. The conflicts that emerge between macro-planning criteria and energy use efficiency are exemplified and the need to reconcile them using the value judgements of political decisionmakers is clarified. The limitations and the scope for refinement of the methodology are also discussed.

Planning for the Australian Information Economy

The study aims to identify and measure the growth of the Australian Information Economy that is destined to play a leading role in Australias future growth and development. A methodology is devised to identify the primary information information commodities that are traded in the market. Three targets (Luddite, Status Quo, Sunrise) for measuring the performance of information economy are foreshadowed. The targets are evaluated using modified Leontief input-output techniques that estimate accounting prices based on objective equilibria and the shadow prices connoting opportunity costs derived from the dual the linear programming problem.. Fiscal policies to subsidies positive externalities generated by the informatization of the economy in the face of the intractability of Pigouvian ideal taxes are reviewed. Finally, the need for anticipatory policy decisions to harness the full benefits of the impending informatization of Australian economy is underscored.

Globalisation and labour immiserisation in Australia

The dissolving trade barriers, financial deregulation, hyper-mobility of capital and the rapid diffusion of new information technologies have ushered the Australian economy into the borderless world. The orthodoxy that states that centralised wage-fixing in Australia has impeded wage flexibility and resulted in high unemployment is unconvincing. Partly, this is because in the 1980s Australian labour market institutions have been decentralised and decollectivised in response to pressures from the borderless world. The insights garnered from cross-sectional comparative statics that, first, skill-biased Schumpeterian technological change was the major cause of labour immiserisation and, second, adverse Stolper-Samuelson trade played an insignificant effect need to be reviewed. Parsimonious dynamic time-series models of trade and technology have been formulated using general-to-specific methods after taking account of stochastic trends through unit root and cointegration tests. Granger causality and non-nested tests applied to these models support the contention that both trade and technology contributed to increasing wage disparity during the borderless era. Moreover the supply side factors such as female participation, immigration and institutional factors such as deunionisation have also increased wage disparity. The deregulation of the Australian labour market by the Workplace Relations Act, whilst an inevitable response to achieve competitiveness in the borderless world market, would exacerbate wage inequality. Policies aimed at skill accumulation on the one hand, and social welfare policies involving negative income taxes on the other may have to be implemented to mitigate the deleterious social effects of rising wage inequality.

Exchange rate intervention in Australia (December 1983 to May 1993)

Abstract This study reviews the rationale and mechanics of exchange rate intervention by the Reserve Bank of Australia (RBA) during the post-float period (12/83–5/93). The various channels through which RBA intervention can affect the exchange rate are discussed. The salient features of Australias post-float intervention experience are surveyed by identifying distinct phases in the study period. A main aim of this study is to shed light on the controversy regarding the effectiveness of RBA intervention from a long-run perspective. Some analysts have claimed that RBA intervention has been ineffective and compared it to the task of Sisyphus. An optimal control model is conceptualized to test the proposition of ineffectiveness of RBA intervention (the Sisyphus hypothesis). Multicointegration techniques are used to test whether the stochastic process proxying RBA intervention exhibits long-run equilibrium relations or optimal proportional control. The test results favor cointegration or optimal control and are on balance unfavorable to the Sisyphus hypothesis.

Analytics of Information and Empirics of the Information Economy

The paper reviews some of the salient analytical contributions of information microeconomics or market uncertainty. It contrasts the prolific growth in the theory of micro information economics with relative neglect of empirical macro information economics or technological change. The explosion of transborder data flows and the collapse of natural monopolies in telecommunications has led to the emergence of economies in the grip of an information technology revolution. This paper presents an algorithm to measure the structure and size of the information economy in a cost-effective manner. The paper concludes that the generation of data for the analysis of the emergent information economy will facilitate the formulation of appropriate strategies to foster the development information economy.