Noisy Parity Relationships in International Macroeconomic Models. Macroeconomic models of the Australian economy play a key role in the design of monetary and fiscal policy. Policymakers use these models either implicitly or explicitly, and usually begin to learn about them in principles courses. Parity relationships are foundation elements of these models, and have powerful implications for our understanding of macroeconomic dynamics. Classical statistical tests may have falsely led to an unhea ....Noisy Parity Relationships in International Macroeconomic Models. Macroeconomic models of the Australian economy play a key role in the design of monetary and fiscal policy. Policymakers use these models either implicitly or explicitly, and usually begin to learn about them in principles courses. Parity relationships are foundation elements of these models, and have powerful implications for our understanding of macroeconomic dynamics. Classical statistical tests may have falsely led to an unhealthy agnosticism regarding many of these relationships. This research will bring more appropriate statistical techniques to bear upon the problem, and if successful will restore confidence in decision-making processes and the relevance and applicability of macroeconomic models. Read moreRead less
The Allocation of Risk and Economic Slumps. The aim of this project is to construct and analyse models that identify a novel feedback mechanism in which the distribution of investment risk interacts with aggregate employment variations. It will provide a useable framework for economic policy analysis in which the distribution of wealth affects the demand for investment risk while the distribution of production risk affects the supply of labour income risk.
Understanding the Effects of News Shocks on Macroeconomic Fluctuations. There are significant potential benefits for Australia. First, it could lead to more effective policymaking, with an understanding of how policy in one branch of the government can affect other sectors that have not been considered before. For example, changes in fiscal policy can affect not just growth, but also unemployment, inflation, and the income distribution. Second, this project will make a contribution to the resear ....Understanding the Effects of News Shocks on Macroeconomic Fluctuations. There are significant potential benefits for Australia. First, it could lead to more effective policymaking, with an understanding of how policy in one branch of the government can affect other sectors that have not been considered before. For example, changes in fiscal policy can affect not just growth, but also unemployment, inflation, and the income distribution. Second, this project will make a contribution to the research training of new macroeconomists in Australia: we will train three PhD students in the very latest methods. We also will organize a conference and bring the very top economists in the world to work with researchers here, and to consider issues surrounding the Australian economy. Read moreRead less
Banking System Competition and the Macro-economy. Australia has one of the most concentrated banking sectors in the world, generating concerns regarding its efficiency. This project aims to develop unified frameworks to understand and evaluate quantitatively how the structure of the banking industry affects the macro-economy and provide policy recommendations for establishing a healthy and efficient banking industry. This project expects to improve understanding of the welfare trade-off between ....Banking System Competition and the Macro-economy. Australia has one of the most concentrated banking sectors in the world, generating concerns regarding its efficiency. This project aims to develop unified frameworks to understand and evaluate quantitatively how the structure of the banking industry affects the macro-economy and provide policy recommendations for establishing a healthy and efficient banking industry. This project expects to improve understanding of the welfare trade-off between bank competition and economic well-being to enable policymakers to better determine the optimal concentration of banking sector in Australia. This will enhance the productivity and international competitiveness of Australia’s financial system and the broader economy.Read moreRead less
Supporting Entry and Growth of Australian Businesses via Tax and Transfers. This project aims to characterise the optimal tax treatment of business income for insurance and efficiency purposes. Using new data for Australia, the project expects to first identify key determinants of businesses creation, growth and exit, before and after COVID-19. In light of those determinants, the project expects to develop original macroeconomic models integrating firm dynamics into optimal taxation frameworks. ....Supporting Entry and Growth of Australian Businesses via Tax and Transfers. This project aims to characterise the optimal tax treatment of business income for insurance and efficiency purposes. Using new data for Australia, the project expects to first identify key determinants of businesses creation, growth and exit, before and after COVID-19. In light of those determinants, the project expects to develop original macroeconomic models integrating firm dynamics into optimal taxation frameworks. Expected outcomes include formulating fiscal policies that provide adequate stimulus to businesses, by balancing public insurance and income inequality. This should deliver evidence-based inputs to promote Australia's post-pandemic recovery, through the design of a fairer and more efficient business tax and transfer system.Read moreRead less
Money, price and output dynamics: a segmented asset markets approach. This project studies the importance of asset market frictions and the cross-sectional composition of nominal spending across households for the monetary policy transmission mechanism (that is, for the channels by which monetary policy affects the broader macro-economy).
Time-consistent macroeconomic policy in nonlinear models. Efforts to use fiscal policy for macro-stabilisation have led to elevated debt levels and possible default in many countries. This project examines the appropriate design of fiscal policy and its implications for debt over the business cycle.
Strategic Contracting with Complementary Assets under Assymetric Information. With the recent tendency for companies to patent any feasible innovations they might make, public policy must focus on the disincentive effects this may have for producers who must combine multiple patents. The project seeks to understand the 'holdout problem' that stems from such situations, and evaluate policy solutions for Australia and Internationally. Expected outcomes include publication in leading Australian and ....Strategic Contracting with Complementary Assets under Assymetric Information. With the recent tendency for companies to patent any feasible innovations they might make, public policy must focus on the disincentive effects this may have for producers who must combine multiple patents. The project seeks to understand the 'holdout problem' that stems from such situations, and evaluate policy solutions for Australia and Internationally. Expected outcomes include publication in leading Australian and International journals, and inputs to the policy debate.Read moreRead less
Monetary policy, redistribution and endogenous asset market incompleteness. This project aims to provide a new framework for modelling agent heterogeneity and for evaluating the effects of monetary policy on aggregate welfare and wealth distribution over the business cycle. This project will focus on monetary policy, using new quantitative theories with new efficient computational methods, to understand and quantify links between monetary policy the dynamics of aggregate outcomes (such as inflat ....Monetary policy, redistribution and endogenous asset market incompleteness. This project aims to provide a new framework for modelling agent heterogeneity and for evaluating the effects of monetary policy on aggregate welfare and wealth distribution over the business cycle. This project will focus on monetary policy, using new quantitative theories with new efficient computational methods, to understand and quantify links between monetary policy the dynamics of aggregate outcomes (such as inflation or employment), and the distribution of individual wealth (such as money, capital and housing).Read moreRead less
Heterogeneity, Wage Inequality, Unemployment, and Economic Growth. This project would provide the first internally consistent theory of wage inequality, unemployment and economic growth - and the roles that government policy variables play in determining them. It would use and extend frontier developments in theory, and identify the settings of policy variables (unemployment insurance, tax structures, education policies) that maximise social welfare, given that governments must satisfy their bud ....Heterogeneity, Wage Inequality, Unemployment, and Economic Growth. This project would provide the first internally consistent theory of wage inequality, unemployment and economic growth - and the roles that government policy variables play in determining them. It would use and extend frontier developments in theory, and identify the settings of policy variables (unemployment insurance, tax structures, education policies) that maximise social welfare, given that governments must satisfy their budget constraints. It also aims to uncover the relationship between the innate abilities of workers and their education choices - and the consequences for macro economies and public policy.Read moreRead less