RDP 8710: Transmission of External Shocks in the RBII Model RBII (1987) Simulation Model Specification[1]

Malcolm L. Edey, Elaine J. Kerrison and Gordon D. Menzies

November 1987

1. Household Expenditure

2. Rate of Growth of Business Fixed Capital Stock

3. Stock of Dwellings

4. Exports of Goods and Services

5. Imports of Goods and Services

6. Domestic Production

7. Price of Domestic Production

8. Price of Exports of Goods and Services

9. Price of Government Current Expenditure

10. Average Weekly Earnings

11. Rate of Growth of Labour Demand

12. Labour Supply

13. Ret Mistralian Private Canital Owned by Overseas Residenta

14. Bank Advances

15. Personal Income Taxes

16. Short Rate

17. Long Rate

18. $A/$US Exchange Rate (when solved for E)

19. Foreign Reserves

20. Net Auatralian Government Capital Owned by Oveseas Residants in US Dollars

21. Money Identities and Policy Rules

22. Inventories

23. Expected Sales

24. Private Expected Stock

25. Business Fixed capital Stock

26. Labour Demand

27. Endognous Interest Paid on Government Debt[2]

Policy Reaction Functions[3]

28. Money Growth Rate Instrument[4]

29. Government Expenditure Instrument

30. Income Tax Rate Instrument

Footnotes

A subscript of zero (o) indicates a constant. D is the differential operation d/dt, e is the exponential operators and log is the logarithmic (to base e) operator. A variable with a hat (^) above it indicates the desired value of the variable. All parameter values are positive. [1]

Inline Equation is generated recursively with a Itarting valul of r9. [2]

When public debt is ondogenous, one of the reaction functions is included as a mechanism of debt control. [3]

J is zero for the first 2 years of a aimulation and then gradually increases to unity over the 4 years following that. [4]