An investigation of the behaviour of Australia's business cycle

Narayan, Paresh Kumar 2008, An investigation of the behaviour of Australia's business cycle, Economic modelling, vol. 25, no. 4, pp. 676-683.

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Title An investigation of the behaviour of Australia's business cycle
Author(s) Narayan, Paresh Kumar
Journal name Economic modelling
Volume number 25
Issue number 4
Start page 676
End page 683
Publisher Elsevier B.V.
Place of publication Amsterdam, The Netherlands
Publication date 2008-07
ISSN 0264-9993
1873-6122
Keyword(s) cointegration
common cycles
health expenditures
permanent and transitory shocks
Summary In this paper we examine the relative importance of permanent and transitory shocks in explaining variations in income, consumption and investment at business cycle horizons for Australia. We use the common trend–common cycle restrictions to estimate a variance decomposition of shocks, and find that over short horizons the bulk of the variations in income and investment are due to permanent shocks, while transitory shocks explain the bulk of the variations in consumption. The former finding is consistent with real business cycle models which attribute business cycles to aggregate supply shocks, while the findings for consumption are consistent with the Keynesian view, which attributes business cycles to aggregate demand shocks.
Language eng
Field of Research 140305 Time-Series Analysis
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2008
Copyright notice ©2007, John Wiley & Sons, Ltd
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017256

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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