bluuebunny/crossref_metadata_2025 huggingface dataset:
Golden Rules for Sustainable Resource Management*
Authors: ENDRESS LEE H. , ROUMASSET JAMES A.
Published: October 2007

This paper presents a simple model of resource management that combines use of a non‐renewable resource, such as oil, with eventual transition to a backstop substitute resource in infinite supply (e.g., solar energy). In the context of this model, we derive golden rules that govern efficiency in both the accumulation of capital and in the extraction of natural resources for use in production. These results supplement the Solow‐Hartwick model of maximin consumption in helping to illuminate the notion of sustainable development.
Using the Murphy Model to Provide Short‐run Macroeconomic Closure for ORANI
Authors: BREECE JAMES H. , McLAREN KEITH R. , MURPHY CHRISTOPHER W. , POWELL ALAN A.
Published: October 2007

A macro model incorporating rational expectations in financial markets (the Murphy Model–MM) is used to endogenize the macroeconomic environment for a comprehensive general equilibrium model (ORANI). The interface exploits the existence of variables which are endogenous to both models, calibrating on a shock to government spending. Prospective benefits include: (1) to the numerous policy oriented users of ORANI, a facility allowing the macroeconomic environment to be determined by a macrodynamic model such as MM; (2) to these users, reassurance that ORANI's short‐run translates in calendar time to about two years; (3) to the clientele of a macro model, the possibility of much more detailed projections.
Television Advertising Regulation and Program Quality*
Authors: WRIGHT DONALD J.
Published: October 2007

In many countries, including Australia and the United Kingdom, there are regulations that limit the amount of advertising content per hour of television broadcasts. This paper examines the effect this regulation has on program quality and viewer welfare. It is shown that regulation can reduce program quality and that its effect on viewer welfare is ambiguous. In some circumstances fostering competition can both reduce the number of advertisements per unit of time and increase program quality. Therefore, depending on the parameters of the model, fostering competition may be preferrable to regulating the amount of advertisements per unit of time.
Excess Returns in a Small Open Economy*
Authors: GRUEN DAVID W. R. , SMITH JEREMY
Published: October 2007

This paper presents detailed analysis of a very unusual event —a recent six‐year period during which big excess returns were earned on the short‐term interest‐bearing assets of a small open economy: Australia. A risk premium does not explain the excess return. Rather than requiring a risk premium, market participants continually expected significant real depreciation of the Australian dollar, despite the fact that on average it appreciated in real terms. Our results may be a consequence of the foreign exchange market only gradually learning about the changed nature of the world capital market in the 1980s.
Exchange Rate Pass‐Through: Testing the Small Country Assumption for Australia*
Authors: DWYER JACQUELINE , KENT CHRISTOPHER , PEASE ANDREW
Published: October 2007

This paper examines exchange rate pass‐through for the prices of imports and manufactured exports. It is found that, in the long run, exchange rate pass‐through over the docks is complete for both classes of good. However, pass‐through to import prices is more rapid than that to manufactured export prices. Also, evidence is presented of a substantial increase in pass‐through to manufactured export prices, in keeping with increased international integration.
Research Published by Australian Economics and Econometrics Departments: 1988‐93*
Authors: TOWE JACK B. , WRIGHT DONALD J.
Published: October 2007

This paper measures an important component of the research output of economics and econometrics teaching departments, namely, the number of pages published during the period 1988‐93, in journals listed by the Journal of Economic Literature. Based on page counts it is found that department rankings are similar over a broad range of journal groupings. It is also found that the median numbers of pages published by each of the groups of senior lecturers, associate professors and professors are quite small, indicating that within these groups research output is highly concentrated among a few active publishers.
Privatization and Reformation*
Authors: KING STEPHEN P.
Published: October 2007

This paper presents a simple model of a government contemplating the pre‐sale reform of a public enterprise. While the government is less efficient at such reform than the eventual owner, failure to reform may be considered an indicator of low commercial value by potential purchasers. Consequently, the government may be unable to avoid socially wasteful restructuring if it wishes to maximize its net sales revenue. The results presented in this paper provide a number of insights and policy recommendations for governments embarking on a privatization program.
The Effect of Nominal Demand Shocks on Manufacturing Output: Evidence from Disaggregated Australian Data*
Authors: OLEKALNS NILSS
Published: October 2007

The menu costs model predicts that during times of rapid inflation firms are less likely to vary output in response to changes in nominal aggregate demand. This paper tests the proposition using a disaggregated sample of Australian three‐digit ASIC manufacturing industries. The results show that a significant number of Australian industries exhibit behaviour that is consistent with this prediction. In addition, the results show that the variability of inflation and changes to the import penetration ratio also influence the response of output to nominal demand changes.
Economic Growth and Convergence Across the Seven Colonies of Australasia: 1861–1991*
Authors: CASHDM PAUL
Published: October 2007

Have the poor economies of Australasia grown faster than the rich ones? This question is analyzed for the seven colonies of Australasia for the period 1861–1991, and it is found that the levels of per‐capita income across the colonies are converging to one another: the initially poor colonies have indeed grown faster. The cross‐sectional dispersion of per‐capita incomes also declined between 1861–1991, but most of this decline occurred in the pre‐Federation 1861–1901 period, as the extent of dispersion in 1991 is very close to that attained in 1901.
An Empirical Investigation of Shock Persistence in Economic Time Series*
Authors: MAYADUNNE GEETHA , EVANS MERRAN , INDER BRETT
Published: October 2007

Whether or not shocks persist has important implications in economics. An empirical study investigates this issue for key Australian and US macroeconomic time series. The existence of persistence is investigated by unit root tests and its magnitude estimated by recently proposed techniques. Results from these different approaches are compared.
Forward Discount Bias: Is it Near‐Rationality in the Foreign Exchange Market?*
Authors: GRUEN DAVID W. R. , MENZIES GORDON D.
Published: October 2007

A risk‐averse US investor adjusts the shares of a portfolio of short‐term nominal domestic and foreign assets to maximize expected utility. The optimal strategy is to respond immediately to all new information which arrives weekly. We develop a model to estimate the cost of optimizing less frequently and find that it is generally very small. For example, if the investor adjusts portfolio shares every three months, an average expected utility loss of 0.16 per cent p.a. is incurred. Hence, slight opportunity costs of frequent optimization may outweigh the benefits. This result may help explain forward discount bias.
An Unequal Spatial Structure of Location and Price with Consumer Density*
Authors: ISHIKAWA TOSHIHARU , TODA MASAO
Published: October 2007

This paper incorporates the interdependent relationship of firms and the increasing consumer density into a framework of spatial equilibrium analysis, and studies the location of firms and the price system on a plane market. As consumer density increases, symmetric equilibrium is established initially for the first‐ and the second‐round entry of firms, but this equilibrium becomes unequal later for the third and the fourth rounds. This fact means that in spatial equilibrium, even if all firms sell identical goods on a plane market, mill prices and market area sizes will differ.
An Empirical Examination of the Fisher Effect in Australia*
Authors: MISHKIN FREDERIC S. , SIMON JOHN
Published: October 2007

This paper analyzes the Fisher effect in Australia. Initial testing indicates that both interest rates and inflation contain unit roots. Furthermore, there are indications that the variables have non‐standard error processes. To overcome problems associated with this and derive the correct small sample distributions of test statistics we make use of Monte Carlo simulations. These tests indicate that while a long‐run Fisher effect seems to exist, there is no evidence of a short‐run Fisher effect. This suggests that, while short‐run changes in interest rates reflect changes in monetary policy, longer run levels indicate inflationary expectations. Thus, the longer run level of interest rates should not be used to characterize the stance of monetary policy.
Performance Pay, Productivity and Morale*
Authors: KENNEDY PETER W.
Published: October 2007

This paper incorporates the notion of worker morale into an economic model of pay and performance, and examines its implications for the efficacy and design of performance‐based pay schemes. A worker's morale is determined by his relative pay status. A contract that rewards only individual performance can therefore undermine the morale of the least skilled workers in a firm and thereby adversely affect their productivity. On the other hand, competition for relative pay status tends to boost the productivity of highly skilled workers in the firm. The net effect on productivity depends on the composition of the firm's workforce. If the workforce is sufficiently heterogeneous then the inclusion of a profit‐sharing component in the pay contract, which reduces the pay differential across workers, can sufficiently boost the morale of the least skilled workers as to improve overall productivity and profitability.
Progressive Taxation and the Life‐Cycle Model: An Application of the Theory of Firm*
Authors: AHMAD EATZAZ
Published: October 2007

In the presence of a progressive consumption (wage income) lax the marginal cost of consumption (leisure) is rising and* the life‐cycle allocation problem of an individual is presentable in the framework of a monopsony. Although the progressive taxes do not in general alter the qualitative nature of standard results on life‐cycle theory, their quantitative implications are serious. In contrast to the equivalence between proportional consumption and wage income taxes, the effects of the two progressive taxes on the life‐cycle consumption and labour supply allocation decision are not only different but in most cases also in opposite directions.
Costing the Job Compact*
Authors: PIGGOTT JOHN , CHAPMAN BRUCE
Published: October 2007

The budgetary cost of any government program should be measured by its impact on the public sector budget balance, over its effective timeframe. Typically, official cost estimates focus on the value of outlays only, and thus create a misleading impression of the opportunity cost of some policy initiatives.

This paper offers estimates of the budgetary cost of the Job Compact, using a simple labour force transition flows model of unemployment. Deadweight, displacement and effectiveness impacts are explicitly addressed. We find that, depending on the values chosen for displacement and effectiveness parameters, budgetary cost can be greater or less than outlay estimates. However, for plausible values of these parameters, the budgetary cost is calculated to be substantially lower than official estimates, and may even be negative.
Alternative Retirement Income Strategies: A Cohort Analysis of Lifetime Redistribution*
Authors: ATKINSON M.E. , CREEDY JOHN , KNOX D.M.
Published: October 2007

This paper compares the lifetime redistribution and progressivity, within a cohort of males, of two retirement income systems. The current government strategy in Australia is to increase the role of occupational superannuation and maintain a means‐tested age pension. The Institute of Actuaries of Australia has recommended a universal pension with a corresponding smaller role for occupational superannuation. In terms of lifetime inequality and progressivity measures, it is found that there is not a substantial difference between the two systems. Other issues, such as the benefit choice at retirement and differential mortality, are found to be more important in determining the lifetime redistributive impact of a retirement income strategy.
Modelling the Probability of Youth Unemployment in Australia*
Authors: HARRIS MARK N.
Published: October 2007

This paper attempts to explain how particular personal characteristics affect the probability of Australian youth unemployment. Results indicate that generally age, education and financial commitments exert a positive influence on employment prospects. Also, there is evidence to suggest that the disabled are disadvantaged in the workplace and that women are less likely to supply their labour if they have children. The results are compared to the known effects of personal characteristics on the duration of unemployment, pointing policy clearly in the direction of age, education and reservation wages.
Convex Costs and the Incentive for Vertical Control*
Authors: HEYWOOD JOHN S. , PAL DEBASHIS
Published: October 2007

This paper builds on the successive monopoly literature and demonstrates that fixed proportions technology downstream and inelastic final demand are not sufficient to eliminate the incentive for vertical control. As long as downstream marginal costs increase, the incentive remains. Moreover, if the downstream firm can influence the convexity of costs, a social as well as a private incentive for such control exists. This results from the ability of a downstream monopolist to increase its profit on infra‐marginal units by choosing a wasteful technology, a technology which the integrated firm avoids.
Unions, Firm Size and Wages*
Authors: MILLER PAUL , MILLER PAUL , MULVEY CHARLES
Published: October 2007

It is well established in the literature that Australian unions raise their members' wages relative to those of otherwise comparable non‐members by some amount in the range 7–15 per cent. However, it is also known that firm size is positively associated with union density and that firm size is positively associated with relative wages independent of unionism. Using a new, large and rich set of data from the Training and Education Survey 1993 we show that the estimated union relative wage effect is largely comprised of bias due to the omission of firm size as a variable in the wage equations usually estimated.
External Debt and Liabilities: Evidence from a Cross Section of Countries*
Authors: CUMBERWORTH MATTHEW , MILBOURNE ROSS
Published: October 2007

This paper tests a simple open economy growth model on a cross section of OECD countries. The predictions are that the savings rate and population growth rate significantly affect net foreign asset positions. We test these predictions and find support for this hypothesis. We also use this as a starting point to test for additional explanations for the variety of net foreign asset changes during the 1980s. We reject the hypotheses that low productivity or low export penetration, or tight monetary policy has any effect upon net asset accumulation across the OECD countries. These relate to policy debates within Australia. We find the evidence on the effect of fiscal policy on net asset positions is ambiguous, that rates of immigration have no effect on net asset positions, and that tax and inflation distortions are significant in explaining net foreign asset or liability positions.
Labour Mobility in the Australian Regions*
Authors: KILPATRICK SUE , FELMINGHAM BRUCE
Published: October 2007

A preliminary analysis of ABS labour mobility surveys for 1989 and 1992 reveals that job mobility within the Australian States occurs more quickly in the boom conditions of 1989 compared with the recession of 1992. And it is generally more rapid in the dynamic regional economies, in particular Queensland, WA and NSW. Male mobility in each State is correlated with tenure and industry unemployment rates at different points of the cycle. The positive association of unemployment and mobility supports the relevance of Lilien's structural adjustment of male mobility in the State economies. Female labour turnover is not responsive to unemployment and depends less often on tenure. Earnings play a limited role in explaining labour mobility generally.
An Evaluation of Income Splitting with Variable Female Labour Supply*
Authors: JONES GLENN , SAVAGE ELIZABETH
Published: October 2007

Debate on the tax unit in Australia often involves claims that a system which allows spouses to split their incomes for the purposes of taxation is superior to an individual based system. In this paper we estimate a female labour supply model on data for married couples and use it to simulate the effects of a switch from the 1985/86 progressive individual personal income tax system to one allowing full income splitting. We analyze distributional outcomes and, at least as far as female labour supply is concerned, change in the excess burden of the tax system. The impacts depend upon the way in which the policy is made revenue neutral. We consider two tax replacement scenarios. We quantify the impact on female hours of work and investigate how welfare impacts vary by household characteristics.
Intergenerational Accounting and Saving in Australia*
Authors: ABLETT JOHN
Published: October 2007

This paper generalizes the Kotlikqff type generational accounting notion of generational imbalance to include net private intergenerational transfers. The Kotlikqff identities are seen to be a subset of the overall intergenerational accounting identities. Simulations for Australia using the intergenerational accounting framework reveal a significant intergenerational imbalance to the detriment of future generations. This suggests current savings rates in Australia are inadequate to permit intergenerational balance.
X‐Efficiency of Australian Permanent Building Societies, 1974–1990*
Authors: ESHO NEIL , SHARPE IAN G.
Published: October 2007

This study examines X‐efficiency of Australian Permanent Building Societies (PBSs) using the stochastic econometric frontier (SEF) approach and compares the results with those derived from an analysis of accounting ratios. It finds: (i) average X‐inefftciency relative to the stochastic cost frontier of 25 per cent both pre‐ and post‐deregulation of the Australian financial system; (ii) when the expense to total assets ratio is averaged over seven to ten years it produces very similar efficiency rankings to the SEF approach; (Hi) PBSs in NSW and Western Australia are more efficient than those in other States; and (iv) Cost function dynamics has little effect on PBS X‐efficiency.
Efficient Bargains and Currency Devaluation*
Authors: LAI CHING‐CHONG , CHANG JUIN‐JEN , CHANG WEN‐YA
Published: October 2007

This paper proposes a new route, namely efficient bargains between the union and the firm over wage and employment, to shed light on the contractionary effects of a currency devaluation. It is found that a currency devaluation will definitely depress the supply of domestic goods when the union and the firm negotiate an efficient wage‐employment contract. Thus our result can be regarded as a theoretical vehicle for explaining the empirical findings of the contractionary devaluation.
Government Purchases and Real Interest Rates with Endogenous Labour Supply*
Authors: PALIVOS THEODORE , YIP CHONG K.
Published: October 2007

Within the one‐sector optimal growth framework with public services and labour‐leisure choice, we find that the effects of temporary productive government spending on the real interest rate depend on the discrepancy between actual and optimal government sizes as well as on the length of the action lag. This paper thus sheds light on the controversy between the empirical findings and the theoretical predictions regarding the behaviour of the real interest rate within the neoclassical framework.
Pollution Reduction: A Pedagogic Note*
Authors: TISATO PETER , PORTER NATHAN
Published: October 2007

The paper presents a new graphical analysis of how a profit‐maximizing firm will respond when required to control pollution. The focus is on graphical presentations which attempt to integrate the two pollution reduction responses open to the firm: output reduction, and use of abatement technology. We argue that existing approaches are deficient, failing to accurately illustrate the firm's optimal pollution reduction response. An alternative graphical presentation, using families of iso profit, iso pollution, and iso tax expenditure curves is developed which successfully illustrates the optimal response.
A Search‐Theoretic Interpretation of Multi‐Outlet Retailers*
Authors: PRENTICE DAVID , SIBLY HUGH
Published: October 2007

Why do retailing firms operate several chains of stores, each of which is in apparent competition with the others? This paper demonstrates that by increasing the number of, apparently independent, stores it controls, a firm can discourage consumer search and increase its market power. It is also shown that an increased share of outlets controlled by a multi‐outlet firm allows both single‐outlet firms and the multi‐outlet firm to raise price and thereby increase profit. These results also imply that once the traditional one‐firm, one‐outlet assumption is relaxed, sequential search models may become unstable.
Education and the Structure of Earnings in Australia*
Authors: BORLAND JEFF
Published: October 2007

This study examines the evolution of earnings of workers with different levels of educational attainment in Australia from 1968* 69 to 1989/90. Descriptive information on average earnings of workers by level of educational attainment is presented, and an assessment of the role of shifts in labour supply and labour demand in explaining changes in earnings differentials between workers by level of educational attainment is undertaken.
The Economic Efficiency of Telecommunications in a Deregulated Market: The case of New Zealand*
Authors: BOER DAVID BOLES DE , EVANS LEWIS
Published: October 2007

This paper estimates the productivity and consumer and producer changes in the New Zealand telecommunications network market between 1987, when it was deregulated, and 1993; as the major firm, Telecom, evolved from a government department to a public company in an environment of light regulation. The growth in productivity is estimated to reduced costs at an annual compound average of 5.6 per cent. The bulk of the substantial gains in consumer surplus has come from price reductions on 1987 consumption levels. There has been marked improvements in the quality of outputs. Shareholders have had a profitable investment.
Job Creation and Job Destruction in Manufacturing Industry in Australia*
Authors: BORLAND JEFF
Published: October 2007

This paper studies properties of employment flows between disaggregated sectors of manufacturing industry in Australia for 1978–79 to 1991–92. Measures of job creation, job destruction and employment reallocation are calculated and the magnitude, correlation and cyclicality of these measures of employment flows are examined. An analysis of the sources of aggregate employment reallocation considers the effects of inter‐ and intra‐sectoral employment flows, and of aggregate and sectoral‐level factors. The consequences of employment reallocation for unemployment outcomes in Australia are also examined.
Taxes, Corporate Financial Policy and Investment Decisions in Australia*
Authors: BENGE MATT
Published: October 2007

This paper presents a formal model of an optimizing firm to examine incentives provided by Australia's full imputation scheme in combination with its capital gains tax provisions. It explores how the tax system affects optimal dividend and financial policy. It derives an expression for the cost of capital for corporate investment which takes account of the way in which corporate tax payments influence firms' ability to pay franked dividends and examines how this is affected by capital gains taxation.
Can Budget Deficits Improve Welfare in both the Short Run and Long Run?*
Authors: TAN KIM‐HENG
Published: October 2007

In the Neoclassical model of public debt, consumers have finite life spans, and budget deficits shift taxes to future generations, reducing savings, raising the interest rate and reducing the capital stock. In such a setting, budget deficits decrease welfare in the long run. This result also holds in an otherwise Ricardian model subject to distortionary taxation. This paper shows that budget deficits are welfare‐improving in the long run if a capital income tax of appropriate magnitude is imposed given a high interest‐rate environment, and this welfare improvement does not come at the expense of welfare reduction in the short run.
International Labour Migrations and the Pseudoconvergence of National Living Standards*
Authors: CLARKE HARRY
Published: October 2007

International labour immigrations between competitive economies promote divergence in international living standards though conventional per capita income measures suggest convergence. Observed convergence due to such immigrations is therefore a pseudoconvergence. Pseudoconvergence arises regardless of good and productive factor numbers but need not arise if competitive imperfections arise from increasing returns or sticky real wages.
Public Infrastructure and Economic Growth: Time‐Series Properties and Evidence*
Authors: LAU SAU‐HIM PAUL , SIN CHOR‐YIU
Published: October 2007

We examine whether economic growth is generated endoge‐nously or exogenously, and estimate the externality effects due to private and public capital respectively. Applying a multivariate stochastic coinlegration method to US data, we find that the evidence is unfavourable to the endogenous growth model with public infrastructure. The estimated elasticity of output with respect to public capital is 0.11, smaller than typical values obtained in single‐equation regression studies. On the other hand, if the share of capital income is taken to be one‐third, then the spillover effect due to private capital is positive but may be as low as 0.10.
Producer Surplus without Apology? Evaluating Investments in RD*
Authors: MARTIN WILL , ALSTON JULIAN M.
Published: October 2007

Comparison of producer surplus with definitive measures based on the profit function reveals potential problems with using changes in producer surplus to measure the benefits of some common types of technical change. Some illustrative applications indicate that the conventional producer surplus measures may seriously underestimate the change in profit induced by new technology, depending on the characteristics of the underlying technology which define the nature of the supply function, and the nature of the technical change. We provide guidelines for identifying cases where producer surplus will under‐estimate producer research benefits, and suggest alternative measures.
Testing for Asymmetry in the Measured and Underground Business Cycles in New Zealand*
Authors: GILES DAVID E. A.
Published: October 2007

In this paper we consider the cyclical component of the underground economy in New Zealand, and compare some of its characteristics with those of the corresponding cycle in real measured GDP. Comparisons are made between the turning points of the two cycles, and formal tests for cyclical asymmetry (in terms of both ‘steepness' and ‘deepness’) are conducted. The turning‐point comparisons reinforce earlier results of Giles (1996a) on the causal linkages between the measured and underground economies. We find that there is no evidence of asymmetry in the cycles for either measured or underground output.
The Effect of Profit Regulations on Combined Two‐Part and Peak‐Load Pricing*
Authors: KIM PANG‐RYONG
Published: October 2007

Although it is known that two‐part tariffs and peak‐load pricing are adopted simultaneously by many regulated public utilities, the effects of regulation on both price schedules have normally been analyzed separately. This paper examines the effect of alternative forms of profit regulation on the rate structure and welfare under combined two‐part and peak‐load pricing.
Australian Evidence on Tax Smoothing and the Optimal Budget Surplus*
Authors: OLEKALNS NILSS
Published: October 2007

This paper tests a version of Barro's tax smoothing hypothesis using Australian data for the period 1964*65 to 1994/95. The model assumes intertemporal optimization by a government seeking to minimize the distortionary effects of tax collection. The model predicts that the budget surplus is stationary, even if government expenditure and tax collections are nonstationary. In addition, the surplus should be a linear function of expected future changes to government expenditure. The results indicate that Australian fiscal policy has been too volatile to be consistent with optimal tax smoothing.
An Analysis of the Implications for the Gold Mining Industry of Alternative Tax Policies: A Regional Disaggregated Model for Australia*
Authors: FELTENSTEIN ANDREW
Published: October 2007

We construct a dynamic model of the Australian economy that has a regional sub‐section representing Western Australia. Within the West Australia sub‐economy, there is a separate technology for the gold mining industry. We implement the model, and simulate a 2.5 per cent tax on gold exports. The outcome shows no fiscal improvement at the national level, although the West Australian budget improves slightly. Real income falls both nationally and in West Australia as the trade balance deteriorates, and an increased real interest rur‐ causes investment to fall. We conclude that the taxation of gold exports leads to few measurable benefits.
User Economies of Scale: Bus Subsidy in Adelaide*
Authors: TISATO PETER
Published: October 2007

This paper considers the User Economies of Scale public transport subsidy argument, using buses in Adelaide as a case study. The paper: operates at a corridor level: models user choice between random and planned behaviour using a logit model; uses a peak load model; models existing social justice policy; considers the effect of distor‐tionary public finance; and considers the impact of introducing competitive tendering in service delivery. It concludes that current subsidies are significantly higher than can be justified on user economies of scale grounds, and optimal subsidy results are significantly affected by distortionary public finance.
Compensating Differentials for Risk of Death in Australia*
Authors: MILLER PAUL , MULVEY CHARLES , NORRIS KEITH
Published: October 2007

The theory of compensating wage differentials suggests that, for workers with similar human capital and other characteristics, earnings should he relatively high in industries where there is an above average risk of death. Using data from Worksafe Australia, this paper confirms the existence of such differentials in Australia. A worker facing the mean fatality risk would receive between 2.8 and 4.8 per cent higher earnings than a worker in a job where there is no risk of death. The lower estimate is similar to that reported by Kniesner and Leeth (1991). The estimated wage differentials are used to calculate the implicit value of a life.
Options and Prospects for Taxation Reform*
Authors: FREEBAIRN JOHN
Published: October 2007

Australian taxation faces growing revenue, efficiency, equity and complexity problems. Replacing the present hybrid mix of taxes on income with either a comprehensive income or expenditure base is a worthy radical reform option. Alternatively, several income base broadening measures to fund rate reductions are explored. Reform of indirect taxes levied by the States as well as the Commonwealth might follow two directions; a broad based consumption tax for general revenue raising; and additional special taxes for externalities. Changing the tax mix brings uncertain net efficiency gains and politically contentious redistributive effects.
Comparison of Alternative Models of Household Equivalence Scales: The Australian Evidence on Unit Record Data*
Authors: LANCASTER GEOFFREY , RAY RANJAN
Published: October 2007

The equivalence scale is an important parameter in view of its use in welfare comparisons. This paper investigates sensitivity of the scale to models, methods and commodities. The estimations range from single equation. OLS in case of Engel and Rothbarth models to maximum likelihood in case of demographic demand systems. The estimated scales from demand systems generally lie between the Engel and Rothbarth scales. The Equivalence Scale Exactness hypothesis, considered necessary for interpretation of the scale as child cost, suffers only a mild rejection. The Australian evidence suggests that rank two demand models, rejected by the data, may exaggerate child costs.
The Natural Unemployment Rate in Australia since the Seventies*
Authors: GROENEWOLD NICOLAAS , HAGGER A. J.
Published: October 2007

The natural rate of unemployment is calculated based on Lilien's(1982) notion that an increase in the sectoral dispersion of demand results in a rise in unemployment for a given level of aggregate demand. In contrast to earlier applications, the dispersion measure is based on sectoral employment growth rates purged of aggregate influences using a VAR model. We find that most of the rise in unemployment in Australia since the 1970s reflects the increase in the underlying natural rate. This finding is broadly consistent with Lilien's results for the US as well as earlier results for Australia and Canada.
Earnings of Public Sector and Private Sector Employees in Australia: Is There a Difference?*
Authors: BORLAND JEFF , HIRSCHBERG JOE , LYE JENNY
Published: October 2007

This study examines differences in average weekly earnings between public sector and private sector employees in Australia. In the 1990s average weekly earnings of full‐time public sector employees were higher than for full‐time private sector employees by 10 to 15 per cent for males and 20 to 25 per cent for females. A variety of decomposition tests are applied to examine the sources of this inter‐sector difference in average weekly earnings. The tests generally show that higher average weekly earnings of public sector employees are wholly explained by inter‐sector differences in productivity‐related characteristics of employees and job characteristics in each sector.
Re‐examining the Evidence for Long‐Run Purchasing Power Parity*
Authors: OLEKALNS NILSS , WILKINS NIGEL
Published: October 2007

Corbae and Ouliaris (1991) examined Australia's long‐run real exchange rate and concluded that because the data follow a random walk, purchasing power parity does not hold as a longrun equilibrium relation. We re‐examine their data by calculating non‐parametric measures of persistence and estimating fractionally integrated ARMA models. We find that shocks to the real exchange rate have a finite life. This result is consistent with long‐run purchasing power parity.
Unlocking Australia's Contingent Protection Black Box*
Authors: FEAVER DONALD , WILSON KENNETH
Published: October 2007

In this paper, the material injury outcome decisions of the Australian regulatory authority (the Anti‐Dumping Authority) are analyzed in order to determine which factors are influential in determining outcome decisions. The paper tests hypotheses concerning how the Australian authorities decide whether an Australian industry has suffered material injury as required under the relevant Australian legislation and the GATT/WTO obligations. The paper concludes that even though the Australian authorities follow a procedurally correct and GATT‐consistent approach, there is nevertheless some evidence of protectionist bias in favour of domestic industries.
Should Tariff Reductions be Announced? An Intertemporal Computable General Equilibrium Analysis
Authors: MALAKELLIS MICHAEL
Published: October 2007

In this paper the macro and structural implications of three alternative tariff‐reduction strategies are examined. Under the first strategy, which is similar to that adopted in Australia in 1973, the tariff cut is implemented without warning. The second strategy is consistent with the current approach of phasing in tariff cuts according to a previously announced schedule. Under the third strategy the tariff cut is implemented several years after it is announced. Our results suggest that if tariffs are to be reduced then it is preferable to implement the policy without warning.
Market Efficiency and Apparent Unit Roots: An Application to Exchange Rates
Authors: BLEANEY MICHAEL
Published: October 2007

Prices in efficient markets are influenced by trading based on past patterns in the series. This induces parameter instability and near‐random‐walk behaviour in any time‐series model of such data. Simulation results suggest that this parameter instability makes stationary series more likely to be erroneously classified as nonstationary, according to standard unit root or stationarity tests. It is shown that individual real exchange rate series appear individually non‐stationary, especially for tests based on a null of stationarity, even though they appear stationary when treated as a panel.
Growth in Australian Cities
Authors: BRADLEY REBECCA , GANS JOSHUA S.
Published: October 2007

This paper is an empirical investigation of the determinants of city growth in Australia from 1981 to 1991. Our basic goal is to explain the population and labour force growth of a cross‐section of cities in the time period using variables representing the initial characteristics of cities. While we find that city growth is negatively correlated with initial size, government sector employment and a city's level of specialization, we also find it to be positively correlated with various measures for the degree of human capital investment in the city. Our results, while simple and non‐structural, mirror the conclusions of studies in the US indicating the importance of studying city level growth in order to understand economy‐wide growth.
Globalization and the Return to Education in Australia
Authors: NEVILE J. W. , SAUNDERS PETER
Published: October 2007

Reich argues that globalization will increase the relative earnings of those whose occupation involves identifying and solving problems and managing ideas. Hence, the return to education, especially education in the form of a university degree, will rise. This paper examines the return to education in Australia in the 1980s and shows that in the private sector there has been a substantial rise in the relative earnings of graduates. Due to special circumstances there has been a fall in the public sector. Previous findings of little change are the result of aggregation problems.
Access Prices for Rail Infrastructure
Authors: FREEBAIRN JOHN
Published: October 2007

Separation of railway infrastructure, a natural monopoly, from a contestable train operator industry raises policy options for setting the infrastructure access fee and for regulation of the infrastructure supplier. Marginal cost, average cost. Ramsey prices and multipart tariff rules for access fees are assessed. Recognizing the importance of train operator entry decisions, a single access fee per gross tonne kilometre based on a mark‐up of marginal cost is favoured. An independent regulator and the use of price ceilings on the infrastructure supplier are proposed.
Depreciation Provisions and Investment Incentives under Full Imputation
Authors: BENGE MATT
Published: October 2007

This paper examines how the Australian full imputation and capital gains tax provisions can combine to influence incentives to invest by affecting the cost of capital. Costs of capital for both unincorporated enterprises and widely held, Australian‐owned companies are examined under idealized depreciation provisions. The paper also presents numerical estimates of costs of capital under actual Australian depreciation provisions.
Sources of Australian Labour Productivity Change 1950–1994
Authors: MADDEN GARY , SAVAGE SCOTT J.
Published: October 2007

This study examines sources of Australian labour productivity change from 1950 to 1994. Time‐series data are used to estimate a model capturing the interaction between labour productivity, fixed capital, human capital, telecommunications, trade openness and international competitiveness. Attention is given to the time‐series properties of these data. ADF tests for unit roots are employed, and the sensitivity of the tests to non‐linear transformations and structural breaks are considered. Estimates suggest that policies that promote investment, economic integration and international competitiveness will improve short‐run labour productivity. In the long run, fixed capital accumulation is the dominant source of productivity improvement.
The Welfare Effect on Different Income Groups of Indirect Tax Changes and Inflation in New Zealand
Authors: CREEDY JOHN
Published: October 2007

This paper has two main aims, both associated with measuring the welfare effects of price changes. First, it examines the distributional effects of the change in the indirect tax system in New Zealand during the mid‐1980s. Second, it examines the distributional impact of recent inflation in New Zealand. The results confirm those of previous studies which found that indirect taxes in New Zealand did not have a substantially larger impact on low income groups compared with high income groups. Furthermore, the introduction of the goods and services tax does not appear to be regressive. However, recent price changes in New Zealand have had a higher impact on the high income groups, although this tendency is quite small.
Is the Phillips Curve A Curve? Some Evidence and Implications for Australia
Authors: DEBELLE GUY , VICKERY JAMES
Published: October 2007

The Phillips curve has generally been estimated in a linear framework. This paper investigates the possibility that the Phillips curve is indeed a curve, and shows that a convex short‐run Phillips curve may be a more accurate representation of reality than the traditionally used linear specification. The paper also discusses the policy implications of convexity in the Phillips curve. These include the need for policy to be forward looking and to act pre‐emptively. Convexity provides a strong rationale for stabilization policy, and it reinforces the need for policy makers to proceed cautiously. It also implies that deep recessions may have only a marginally greater disinflationary impact than shallower ones, unless they induce large credibility bonuses.
Asymmetry and Duration Dependence in Australian GDP and Unemployment
Authors: BODMAN PHILIP M.
Published: October 2007

The periodic structure of business cycles suggests that significant asymmetries are present over different phases of the cycle. This paper uses markov regime‐switching models with fixed and duration dependent trasition probabilities to directly model expansions, contractions and durations in Australian GDP growth and unemployment growth. Evidence is found of significant asymmetry in growth rates across expansions and contractions for both series. GDP contractions exhibit duration dependence implying that as output recessions age the likelihood of switching into an expansion phase increases. Unemployment growth does not exhibit duration dependence in either phase. Evidence is also presented that non‐linearities in unemployment growth are well explained by the asymmetries in the GDP growth cycle. The analysis suggests that recessions are periods of rapid and intense job destruction, that Australian unemployment tends to ratchet up in recessionary periods and, in contrast to US and UK studies, that shocks to Australian unemployment growth are more persistent in recessions than expansions.
Trade Liberalization and Productivity Growth: Time‐Series Evidence from Australian Manufacturing
Authors: CHAND SATISH
Published: October 2007

This paper uses historical annual data for 27 years from 1968‐69 on eight two‐digit ANZSIC industries to assess the impact of the changes in industry assistance on economic efficiency. The empirical analysis shows that a 1 per cent decline in the nominal rate of assistance leads to between O.J 8 and 056 per cent gain in total factor productivity, the latter our measure of economic efficiency. This finding has strong policy implications for the future of tariff reform in the manufacturing sector.
Heterogeneous Preferences, Education Expenditures and Income Distribution
Authors: CARDAK BULY A.
Published: October 2007

This paper introduces heterogeneous preferences to a growth model which incorporates human capital, accumulated through either public or private education. The implications of heterogeneous preferences for income and its distribution are the focus of the paper. Public education expenditure is determined through a voting mechanism where the median preference rather than median income household is the decisive voter. The paper extends the work of Glomm and Ravikumar (1992) and shows first, that heterogeneous preferences increase income inequality in the private education model and second, public education can overcome the added heterogeneity and reduce income inequality. The results strengthen the arguments for public education as a redistributive mechanism.
The WTO Agenda for the New Millennium
Authors: ANDERSON KYM
Published: October 2007

This paper examines the main challenges confronting the WTO and assesses the WTO's potential to address each of these issues in the near term. The immediate challenges include completing the integration of agriculture and textiles and clothing into the mainstream of the GATT, and improving rules for liberalizing trade in services. But many new issues have arisen during the 1990s. The paper assesses both the opportunities available to meet those challenges and the prospects for success in further market liberalization via a new round of multilateral trade negotiations. It concludes by drawing out implications of these developments for Australia.
The Population Sub‐Group Income Effects on Inequality: Analytical Framework and an Empirical Illustration
Authors: PAUL SATYA
Published: October 2007

A method is developed to examine the population sub‐group income effects on inequality using the generalized Theil indices. The proposed method is illustrated by computing the effects of marginal changes in the occupation‐specific incomes on per capita income inequality in Australia based on data for 7197 sample households relating to the 1988‐89 Household Expenditure Survey conducted by the Australian Bureau of Statistics (ABS). The study shows that the growth of (distribution neutral) per capita income in four occupations, namely, unemployed and pensioners, trade‐persons, machine operators and laborers, is inequality reducing whereas the growth of per capita income in all other occupations is inequality augmenting. The occupation‐specific income effects on between‐group inequality are, however, stronger than those on within‐group inequality. These findings are invariant to the choice of alternative distributional weights used in the generalized Theil indices.
Earnings Inequality in Australia: Changes, Causes and Consequences
Authors: BORLAND JEFF
Published: October 2007

This article reviews research on recent developments in earnings inequality in Australia. Four main issues are addressed. First, what are the main changes in earnings inequality which have occurred? Second, what do we know about the causes of changes in earnings inequality? Third, how have earnings differentials between workers in different skills groups changed, and to what extent can those changes be explained by shifts in the relative demand for labour and relative supply of labour by level of skill? Fourth, how have changes in earnings inequality affected the distribution of income?