A Structural Model of Australia as a Small Open Economy

18 Pages Posted: 27 Apr 2009

Date Written: 2008-07


This paper sets up and estimates a structural model of Australia as a small open economy using Bayesian techniques. Unlike other recent studies, the paper shows that a small micro-founded model can capture the open economy dimensions quite well. Specifically, the model attributes a substantial fraction of the volatility of domestic output and inflation to foreign disturbances, close to what is suggested by unrestricted VAR studies. The paper also investigates the effects of various exogenous shocks on the Australian economy.

Suggested Citation

Nimark, Kristoffer P., A Structural Model of Australia as a Small Open Economy (2008-07). Australian Economic Review, Vol. 42, Issue 1, pp. 24-41, March 2009, Available at SSRN: https://ssrn.com/abstract=1375783 or http://dx.doi.org/10.1111/j.1467-8462.2009.00523.x

Kristoffer P. Nimark (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005

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