Research Discussion Paper – RDP 2000-05 A Small Model of the Australian Macroeconomy

Contents

• Introduction
• Overview
• Equations
• The Steady State and Potential Output
• Simulations
• Summary
• Appendix A: Covariance-correlation Matrix of the Equation Residuals
• Appendix B: Testing for a Structural Break
• Appendix C: Adjusting for Tariffs and the Balassa-Samuelson Effect
• Appendix D: Glossary and Data
• References

The first version of this model was put together by David Gruen and Geoff Shuetrim in late 1995 and presented in June 1996 at a Reserve Bank of Australia one-day conference on monetary policy. A modified version was subsequently used by Gordon de Brouwer, James O'Regan, Philip Lowe and Luci Ellis in papers prepared for the 1997 Reserve Bank of Australia Conference Volume. Thanks are due to these people and to John Romalis, Alex Heath, Gordon Menzies, Troy Swann and Matthew Boge for contributions to the model's development over several years and to Adrian Pagan for helpful comments. Any errors are ours alone. The views expressed herein are those of the authors and do not necessarily reflect those of the Reserve Bank of Australia.