RDP 8710: Transmission of External Shocks in the RBII Model Variables Used in RBII[1]

A bank advances to private sector
B government bonds held by private non-bank groups
c* reel cash benefits to persons
C stock of same day funds held by banks
Cr domestic credit
CTB* effective company tax base
d real household consumption expenditure
E exchange rata ($A/$US)
F not Australian private capital owned by overteat residents
Inline Equation not Australian government capital owned by overseas residents
F net Australian private capital owned by overseas residents
g1* real government current expenditure
g2* real governnent capital expenditure
g3* real public authorities capital expenditure
h* required liquidity ratio of the banking tector
i real imports of goods and services
IPD* interest payments on government debt
k proportionate change in the real stock of business fixed capital
k1 proportionate change in the real stock of non-mining business fixed capital
k2 proportionate change In the stock of dining business fixed capital
K real stock of business fixed capital
Kh real stock of dwellings
Kminv* stock of mining capital
l proportionate change In employment
L employment
η real stock of money (KIP)
npk marginal product of capital
npH marginal product of labour
M stock of money (K3)
MT* target stock of money (H3)
HISC1* miscellaneous Item associated with money formation
MISC2* miscellaneous money item In the Commonwealth budget deficit
HISC3* miscellaneous item associated with Interest payments on government debt
N labour supply
P price of domestic output
pbt price of domettlc output net of indirect taxet
pd contunptlon deflator
pg price of government contunptlon expenditure
P1 Auttrallan Import prices ($US)
Pw* world prices (JUS)
Pwx* world price of Australian export goods (SUS)
Px Australian price of exportable goods and services
QA* synthetic variable for growth of bank advances, 1973
QDS* synthetic variable for U.S. dock strike. 1969
Q1* synthetic variable for growth of Imports. 1974-1980
r long-term Interest rate
rs short-term Interest rate
reu* interest rate on 90-day Eurodollar bills
rk real marginal cost of capital
rw* interest rate on 10-year US government bonds
R* gold end foreign exchange reserve!
s talet
s* expected tales
Inline Equation private expected sales
td* real statistical discrepancy
t* time trend starting in 1959(3)
t11* Index of Income tax rate schedule
t2* average rate of tax on contunptlon
t3* average rate of tariffs
t4* average rate of payroll tax
t5* statutory company tax rate
t6* average rate of tax on expenditure
T1 receipt! of direct taxet
T11 receipts of personal Income tax
T12 receipts of company tax
T2 receipts of Indirect taxes
T21 receipts of sales tax
T22 receipts of payroll tax
ν real stock of Inventories of goods
wa* Index of real award wages
wr real marginal cost of labour
W Index of average earnings
x real exports of goods and services
xd real demand for exports of goods and services
xs real supply of exports of goods and services
Inline Equation real world exports of goods and services
y real domestic output (net of depreciation)
Inline Equation real normal domestic output (net of depreciation)
yd real disposable Income
yf* real fane output (net of depreciation)
ynf real non-farm output (net of depreciation)
yT terms of trade adjusted real domestic output (net of depreciation)
z* population of working age
ξ expected rate of depreciation
Table A1: Parameter Values
Parametar Value Parameter Value
α1 0.112 β24 0.019
α2 0.688 β25 0.231
α3 0.024 β29 0.200
α4 0.834 β30 0.048
α5 0.100 β31 0.381
α6 0.700 β32 0.044
α7 0.413 β34 0.081
α8 0.538 β35 2.406
α9 1.435 β36 0.139
α10 0.232    
α11 2.169 β40 0.750
α12 0.130 β46 2.000
α13 1.000 β47 2.000
α15 0.206 β50 0.500
α16 0.415 β51 0.029
β1 0.029 β53 0.558
β2 0.300 β54 1.000
β3 0.200 β55 0.900
β6 0.500 β59 10.000
β7 0.934 β71 0.700
β8 0.489 β72 0.100
β9 0.391    
β10 0.400    
β11 0.009    
β12 1.019    
β13 0.030    
β14 0.061    
β16 0.500    
β17 0.100    
β18 1.065    
β19 0.015    
β20 0.188    
β21 0.928    
β22 0.079    
β23 0.180    
Stead State Growth Rates
Variable Notation Growth Rate
Inline Equation λ1 (.012)
Inline Equation λ2 – λ1 (.009)
Inline Equation λ2 – λ1 + λ4 (.0165)
N, L, Z* λ1 – λ4 (.0045)
Trend rate of technical progress λ3 (.0045)
Trend rate of growth of labour productivity λ4 = λ3/(1−β10) (.0075)
Inline Equation λ2 (.021)
IPD, MISC1, MISC2, MISC3, Inline Equation, Inline Equation    
Inline Equation (0.0)

Footnote

An asterisk (*) next to t variable indicates that it it exogenous. [1]