Rival macroeconomic paradigms and Australian stylised facts [Paradigmi macroeconomici alternative e fatti stilizzati dell'economia australiana]

Karunaratne, N. D. (2000) Rival macroeconomic paradigms and Australian stylised facts [Paradigmi macroeconomici alternative e fatti stilizzati dell'economia australiana]. Economia Internazionale [International Economics], LIII 2: 185-201.


Author Karunaratne, N. D.
Title Rival macroeconomic paradigms and Australian stylised facts [Paradigmi macroeconomici alternative e fatti stilizzati dell'economia australiana]
Formatted title
Rival macroeconomic paradigms and Australian stylised facts [Paradigmi macroeconomici alternative e fatti stilizzati dell’economia australiana]
Journal name Economia Internazionale [International Economics]   Check publisher's open access policy
ISSN 0012-981X
Publication date 2000-05
Sub-type Article (original research)
Volume LIII
Issue 2
Start page 185
End page 201
Total pages 17
Place of publication Genova, Italy
Publisher Camera Di Commercio Di Genova [Chamber of Commerce, Genoa]
Collection year 2000
Language eng
ita
Subject C1
340102 Macroeconomic Theory
720100 Macroeconomic Issues
Formatted abstract
This paper reports the stylised facts resulting from the tests of rival macroeconomic models in explaining the Australian business cycle during the sample period 1966(3)-1995(3). The dominant rival paradigms such as the New Classical, Keynesian and the Real Business Cycle theories have been tested using both Granger causality and non-nested testing techniques. The time-series data used for modelling the rival paradigms were processed using unit root and cointegration econometrics to guard against possible spurious regression inferences due to nonstationarity in the data. Parsimonious data congruent models for testing the rival paradigms were derived by the application of the general-to-specific methodology. The problem of non-spherical errors created by the use of generated regressors in the specification of business cycle models was tackled by replacing ordinary least squares by generalised least squares estimates. The empirical results supported the conclusion that hybrid macroeconomic paradigms encompassing both demand and supply side shocks provide more plausible explanations of the Australian business cycle than tests narrowly focussed only on demand side shocks. The study results challenge the narrow view that rival macroeconomic theories would have failed to provide meaningful guidelines to Australian policymakers to implement counter-cyclical policies during the study period.
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
 
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Created: Tue, 10 Jun 2008, 13:08:46 EST