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Dynamic Adjustments to Terms of Trade Shocks: The USA Productivity Boom and Australia

Author

Listed:
  • Richard G. Harris

    (Department of Economics, Simon Fraser University)

  • Peter E. Robertson

    (School of Economics, The University of New South Wales)

Abstract

How has the USA’s “new economy” productivity boom affected Australia? We consider this question using a dynamic multi-sector growth model of the Australian and USA economies. We find that productivity growth in the USA 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 we find that 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 skilled labour and higher education.

Suggested Citation

  • Richard G. Harris & Peter E. Robertson, 2007. "Dynamic Adjustments to Terms of Trade Shocks: The USA Productivity Boom and Australia," Discussion Papers 2007-16, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2007-16
    as

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    File URL: http://wwwdocs.fce.unsw.edu.au/economics/Research/WorkingPapers/2007_16.pdf
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    References listed on IDEAS

    as
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    Keywords

    Terms of Trade; Productivity; Economic Growth; Human Capital; Computable General Equilibrium Models;
    All these keywords.

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