IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v170y2025ics0165188924002215.html
   My bibliography  Save this article

A three-sector structural VAR model for Australia

Author

Listed:
  • Fry-Mckibbin, Renée
  • Greenwood-Nimmo, Matthew
  • Kima, Richard
  • Volkov, Vladimir

Abstract

We develop a three-sector structural VAR model of the Australian economy to analyze the macroeconomic effects of resource reallocation among the mining, manufacturing and non-tradable sectors in the context of the resource boom of the 2000s. Impulse response analysis reveals that both commodity demand and supply shocks drive the reallocation of capital and labor toward the mining sector, with the reallocation being larger and more enduring in the case of a demand shock. Using a novel measure of spillover intensity constructed from a multivariate historical decomposition, we identify four phases that characterize the Australian economy between 1988 and 2019: (i) capital deepening; (ii) the resource boom; (iii) the unwinding of the boom; and (iv) the post-boom phase. We show that the structural shocks generate patterns of sectoral reallocation that vary across these four phases. Overall, our results indicate evidence of structural change with little evidence of Dutch disease.

Suggested Citation

  • Fry-Mckibbin, Renée & Greenwood-Nimmo, Matthew & Kima, Richard & Volkov, Vladimir, 2025. "A three-sector structural VAR model for Australia," Journal of Economic Dynamics and Control, Elsevier, vol. 170(C).
    • Handle: RePEc:eee:dyncon:v:170:y:2025:i:c:s0165188924002215
    DOI: 10.1016/j.jedc.2024.105029
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165188924002215
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jedc.2024.105029?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Commodity supply and demand shocks; Mining and non-mining sectors; Dutch disease; Australian economy; Mining boom; Multivariate historical decomposition; Spillovers;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:170:y:2025:i:c:s0165188924002215. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jedc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.