##a. these results are based on semi - structural and dsge models. different modelling approaches ( e. g. vector autoregression models ) tend to yield a wider range of estimates regarding the macroeconomic effects of monetary policy. even so, these approaches do not suggest that australia is an outlier in relation to other economies. note that the estimates presented here almost all come from a one - quarter, unanticipated monetary policy shock that is then unwound. this approach is standard practice in the literature and allows for a relatively consistent comparison of outputs across models. however, the artificial nature of the shocks used means we should not read these estimates as reflecting the real - world strength of monetary policy in an absolute sense. for example, a larger effect would be apparent if a change to the policy rate was held in place for longer than a quarter. during the pandemic, the share of debt fixed for periods longer than one year increased noticeably in response to a decline in fixed rates relative to variable rates following the package of policy measures of the rba in response to the pandemic. even so, this share remained lower than in most other countries. it has since declined to historical lows. presently, 97 per cent of housing credit is either variable rate or fixed for a term of one year or less. see rba ( 2022 ), ‘ review of the term funding facility ’. for larger businesses, some of this variable - rate borrowing may be hedged. see rba ( 2024 ), ‘ chapter 2 : resilience of australian households and businesses ’, financial stability review, september. see castro m and s jordan wood ( 2022 ), ‘ how changing interest rates affect variable - rate loans to u. s. firms ’, on the economy blog, 16 august. for the year to date in australia only around 6 per cent of the value of bonds issued by non - financial corporates had floating rate coupons, while this was even lower in the united states at 2 per cent. for a cross - country overview of household and business exposures to interest rate risk, see committee on the global financial system ( 2024 ), ‘ interest rate risk exposures of non - financial corporates and households : implications for monetary policy transmission and financial stability ’, cgfs papers no 70, november. average outstanding mortgage rates also rose at a similar rate in new zealand, where most mortgages have residual terms of less than a year

, require similar elements, including the independence of the relevant decision - maker – from both the political process and the markets and institutions affected by the decisions. 163 / 2009 provisions as by a complex set of variable capital ratios. what is needed is to allow banks more easily to make more forward - looking provisions when either they or the supervisor thinks they should. this is an important area of work for regulators. one should also be realistic that while using balance sheet regulation as a macro - prudential tool may have attractions, it is no panacea. of course there may be occasions when the setting of monetary policy is about right for most of the economy but there is a desire to calm down some over - exuberant borrowing behaviour in a particular sector. in such cases, some kind of temporary regulatory measure may well be useful. but as those with any recollection of australian experience of the 1960s and 1970s will know, if the fundamental problem is actually that financial conditions are just too easy – that is, interest rates are too low – balance sheet regulation won ’ t ultimately constrain credit growth. over time, private markets will find a way of doing the business outside of the regulated sector. then the authorities face the question of whether or not to expand the scope of regulation to more sectors – just as we did in the 1970s. a possible outcome is that, the harder we regulate a set of institutions as a result of the last crisis, the more likely it becomes that the next crisis occurs in the hitherto unregulated part, perhaps even among institutions that do not yet exist. if the conditions are such that people want to take risk and gear up, they will find a way. of course, that is acceptable provided the relevant private parties can be allowed to fail without bringing down the core part of the system. caveat emptor can apply outside of the regulated net if there are few spillovers. but if risk - taking activity goes on long enough, then sufficient leverage may well accumulate somewhere to make the ensuing deleveraging generally disruptive, placing policy - makers once again in a very awkward situation. too big to fail and that brings us to the most difficult of all the issues, namely that of the too - big - to - fail institution. here the term “ big ” might mean a large balance sheet, or refer to interconnectedness or complexity. or all three of the above. in some countries, the debate on this issue is now quite active