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Intra & Inter-Regional Shocks: A New Metric with an Application to Australasian Currency Union

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  • Arthur Grimes

    (Motu Economic and Public Policy Research)

Abstract

We place regional industry structures at centre stage in currency union analysis, decomposing differences between regional and aggregate cycles into "industry structure" and "industry cycle" effects. The industry structure effect indicates whether a region's industry structure causes its cycle to deviate from the aggregate; the industry cycle effect indicates the importance of region-specific shocks in causing a deviation between cycles. We apply the methodology to Australasia. One region, ACT, has a material industry structure effect arising from its heavy central government concentration. No other region has a material industry structure effect; their cycles differ from the aggregate due to region-specific shocks.

Suggested Citation

  • Arthur Grimes, 2005. "Intra & Inter-Regional Shocks: A New Metric with an Application to Australasian Currency Union," Working Papers 05_03, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:05_03
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    References listed on IDEAS

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    1. Nils Björksten & Arthur Grimes & Özer Karagedikli & Christopher Plantier, 2004. "What can the Taylor rule tell us about a currency union between New Zealand and Australia?," Reserve Bank of New Zealand Discussion Paper Series DP 2004/05, Reserve Bank of New Zealand.
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    Cited by:

    1. Sylvia Dixon & David C. Maré, 2005. "Changes in the Mâori Income Distribution: Evidence from the Population Census," Labor and Demography 0509006, University Library of Munich, Germany.
    2. Viv Hall & John McDermott, 2008. "An Unobserved Components Common Cycle For Australia? Implications For A Common Currency," CAMA Working Papers 2008-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Sebastian Edwards, 2006. "External Imbalances in an Advanced, Commodity-Exporting Country: The Case of New Zealand," NBER Working Papers 12620, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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