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The Dynamic Effects of the US Productivity Boom on Australia

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  • RICHARD G. HARRIS
  • PETER E ROBERTSON

Abstract

How has the USA's ‘new economy’ productivity boom affected Australia? We consider this question using a dynamic multisector growth model of the Australian and US economies. We find that productivity growth in the US durables sector generates small but important gains to Australia. We find that the transmission of growth is generated through increased export demand for agriculture. Consequently, the USA's productivity growth tends to favour Australia's traditional export sectors. Likewise, it increases the relative demand for less skilled labour in Australia and reduces the demand for more skilled labour and higher education.

Suggested Citation

  • Richard G. Harris & Peter E Robertson, 2007. "The Dynamic Effects of the US Productivity Boom on Australia," The Economic Record, The Economic Society of Australia, vol. 83(s1), pages 35-45, September.
    • Handle: RePEc:bla:ecorec:v:83:y:2007:i:s1:p:s35-s45
    DOI: 10.1111/j.1475-4932.2007.00408.x
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    References listed on IDEAS

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    1. Karnit Flug & Zvi Hercowitz, 2000. "Equipment Investment and the Relative Demand for Skilled Labor: International Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 461-485, July.
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    3. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did Productivity Growth Go? Inflation Dynamics and the Distribution of Income," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 67-150.
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    7. Barry Eichengreen, 2004. "Productivity Growth, the New Economy, and Catching Up," Review of International Economics, Wiley Blackwell, vol. 12(2), pages 243-245, May.
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    Cited by:

    1. Richard G. Harris & Peter E. Robertson, 2009. "Dynamic Gains and Market Access Insurance: Another Look at the Australia–US Free Trade Agreement," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(4), pages 435-452, December.

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