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Supply-Side Shocks: The Case of Australian Gold

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  • Maddock, Rodney
  • McLean, Ian

Abstract

A literature has developed recently to analyze the disruptive effects on small, open economies of a sudden change in the value of their natural resources. The paper looks to that literature to explain the effect on the Australian colonies of the discovery of substantial gold deposits in the 1850s. The price and quantity adjustments predicted by the model are found to be well supported by the historical experience with one important exception. Immigration played a far greater role in the Australian case than has been suggested in the theoretical literature. The model does, however, allow for a compact description of the confusing decade in Australian history and explains a number of previously unconnected phenomena.

Suggested Citation

  • Maddock, Rodney & McLean, Ian, 1984. "Supply-Side Shocks: The Case of Australian Gold," The Journal of Economic History, Cambridge University Press, vol. 44(4), pages 1047-1067, December.
    • Handle: RePEc:cup:jechis:v:44:y:1984:i:04:p:1047-1067_03
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    Cited by:

    1. Celal Bayari, 2016. "Economic Geography of the Australian Mining Industry," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 107(5), pages 552-566, December.
    2. Gregory, Robert G., 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-30.
    3. Kym Anderson, 2018. "Mining’s impact on the competitiveness of other sectors in a resource-rich economy: Australia since the 1840s," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 141-151, May.
    4. Gerlach, Stefan & Stuart, Rebecca, 2021. "International Co-movements of Inflation, 1851-1913," CEPR Discussion Papers 15914, C.E.P.R. Discussion Papers.
    5. Edwyna Harris & Sumner La Croix, 2021. "Australia’s Forgotten Copper Mining Boom: Understanding How South Australia Avoided Dutch Disease, 1843–1850," The Economic Record, The Economic Society of Australia, vol. 97(318), pages 424-439, September.
    6. Qiang, Ye, 1999. "How different is mining from mineral processing? A general equilibrium analysis of new resources projects in Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(3), pages 1-26, September.
    7. Nowak, Jean-Jacques, 1995. "Le syndrome néerlandais : relations intersectorielles et vulnérabilité des branches exposées," L'Actualité Economique, Société Canadienne de Science Economique, vol. 71(3), pages 308-333, septembre.
    8. Dmytro Ostapenko, 2014. "‘Does Farming Pay in Victoria?’ Profit Potential of the Farming Industry in Mid-Nineteenth-Century Victoria," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 54(1), pages 37-61, March.
    9. David Greasley & Jakob B. Madsen, 2017. "The Rise and Fall of Exceptional Australian Incomes Since 1800," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(3), pages 264-290, November.
    10. Marek Szturo & Bogdan Włodarczyk & Alberto Burchi & Ireneusz Miciuła & Karolina Szturo, 2021. "Improving Relations between a State and a Business Enterprise in the Context of Counteracting Adverse Effects of the Resource Curse," Sustainability, MDPI, vol. 13(3), pages 1-14, January.
    11. Anderson, Kym, 2016. "Sectoral Trends and Shocks in Australia’s Economic Growth," CEPR Discussion Papers 11598, C.E.P.R. Discussion Papers.
    12. Jean-Philippe Stijns, 2003. "An Empirical Test of the Dutch Disease Hypothesis using a Gravity Model of Trade," International Trade 0305001, University Library of Munich, Germany.
    13. McLean, Ian W., 2007. "Why was Australia so rich?," Explorations in Economic History, Elsevier, vol. 44(4), pages 635-656, October.
    14. repec:ags:aare16:235308 is not listed on IDEAS
    15. Keir Reeves, 2010. "Sojourners Or A New Diaspora? Economic Implications Of The Movement Of Chinese Miners To The South‐West Pacific Goldfields," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 50(2), pages 178-192, July.
    16. Ådne Cappelen & Torbjørn Eika, 2020. "Immigration and the Dutch disease A counterfactual analysis of the Norwegian resource boom 2004-2013," Open Economies Review, Springer, vol. 31(3), pages 669-690, July.
    17. Keir Reeves & Lionel Frost & Charles Fahey, 2010. "Integrating The Historiography Of The Nineteenth‐Century Gold Rushes," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 50(2), pages 111-128, July.
    18. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    19. Stephen Broadberry & Douglas A. Irwin, 2007. "Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861–1948," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 262-274, September.
    20. K.H. Choi, 1988. "The Economics of Booming Sectors," Economics Discussion / Working Papers 88-04, The University of Western Australia, Department of Economics.
    21. Stefan Gerlach & Rebecca Stuart, 2024. "International co-movements of inflation, 1851–1913," Oxford Economic Papers, Oxford University Press, vol. 76(4), pages 997-1013.
    22. Kym Anderson, 2022. "Structural transformation in growing open economies: Australia’s experience," Departmental Working Papers 2022-13, The Australian National University, Arndt-Corden Department of Economics.
    23. Kym Anderson, 2023. "Why did agriculture’s share of Australian GDP not decline for a century?," Departmental Working Papers 2023-09, The Australian National University, Arndt-Corden Department of Economics.
    24. Kym Anderson, 2017. "Sectoral Trends and Shocks in Australia's Economic Growth," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(1), pages 2-21, March.

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