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Monetary Policy in a Heterogeneous Monetary Union: The Australian Experience

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  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)

Abstract

The geological and climatic conditions of the Australian continent have made Australia a heterogeneous monetary union. Manufacturing and service industries are located in the population centers in the temperate southeast, and mining and pastoral activities take place in the vast expanses of the interior and north. In a small open economy with easy access to international capital markets, monetary policy is transmitted through the exchange rate. Monetary policy affects the interior and north more strongly than the southeastern seaboard because primary goods are mainly exported, whereas services and manufactures are mostly consumed domestically. As a consequence, the Reserve Bank of Australia must reconcile the economic interests of the interior and north and the southeastern seaboard.

Suggested Citation

  • Ernst Juerg Weber, 2004. "Monetary Policy in a Heterogeneous Monetary Union: The Australian Experience," Economics Discussion / Working Papers 04-08, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:04-08
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    Cited by:

    1. Robert Dixon & David Shepherd, 2013. "Regional Dimensions of the Australian Business Cycle," Regional Studies, Taylor & Francis Journals, vol. 47(2), pages 264-281, February.
    2. David Norman & Thomas Walker, 2004. "Co-movement of Australian State Business Cycles," RBA Research Discussion Papers rdp2004-09, Reserve Bank of Australia.
    3. Jeremy Lawson & Daniel Rees, 2008. "A Sectoral Model of the Australian Economy," RBA Research Discussion Papers rdp2008-01, Reserve Bank of Australia.
    4. Thomas Walker & David Norman, 2004. "Co-movement of Australian State Business Cycles," Econometric Society 2004 Australasian Meetings 334, Econometric Society.
    5. Ridhwan, M.M. & Nijkamp, P. & Rietveld, P., 2008. "Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    6. Víctor Hugo Torres‐Preciado, 2021. "Monetary policy and regional economic performance in Mexico: A structural panel VAR approach," Growth and Change, Wiley Blackwell, vol. 52(1), pages 195-223, March.
    7. Shaun Markham, 2020. "Monetary policy and regional unemployment," Reserve Bank of New Zealand Analytical Notes series AN2020/08, Reserve Bank of New Zealand.
    8. Tan, Wenhao & Cao, Lin & Zhao, Jianfeng & Wang, Haolun & Shao, Chenhan, 2024. "Macroeconomic fluctuation and internal capital allocation in business group," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).

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