##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

hardship ’, may ; rba, n 14. see rba, n 14. see bullo g, a chinnery, s roche, e smith and p wallis ( 2024 ), ‘ small business economic and financial conditions ’, rba bulletin, october. see rba, n 14. these factors include the removal of significant support measures put in place during the pandemic, weaker demand, and the australian tax office resuming enforcement actions on unpaid taxes. most businesses entering insolvency are small businesses with little debt. despite the rise, insolvencies as a share of businesses remain below pre - pandemic trends. see rba, n 14. see kent c ( 2023 ), ‘ channels of transmission ’, address to bloomberg, sydney, 11 october. savers that are liquidity constrained, such as pensioners, have been found to have a relatively high marginal propensity to consume ( mpc ), but they make up a relatively small proportion of households, see la cava g, h hughson and g kaplan ( 2016 ), ’ the household cash flow channel of monetary policy ’, rba research discussion paper no 2016 - 12. for a discussion of differences in the mpc by income, see berger - thomson l, e chung and r mckibbin ( 2010 ), ‘ estimating marginal propensities to consume in australia using micro data ’, economic record, 15 august. for differences by wealth, see la cava g, h hughson and g kaplan ( 2016 ), ‘ housing wealth effects : cross - sectional evidence from new vehicle registrations ’, rba discussion paper no 2016 - 02. see ballantyne a, t cusbert, r evans, r guttmann, j hambur, a hamilton, e kendall, r mccirick, g nodari and d rees ( 2019 ), ‘ martin has its place : a macroeconometric model of the australian economy ’, rba research discussion paper no 2019 - 07 ; gross i and a leigh ( 2022 ), ‘ assessing australian monetary policy in the twenty - first century ’, economic record, 13 june. see kent, n 21. this effect typically operates in reverse as interest rates fall, since most us mortgages allow borrowers to refinance at lower rates with minimal penalties. the current easing of monetary policy by the fed may be an exception, since long - term rates will need to