The changing nature of inflation control in Australia

Mitchell, William, Muysken, Joan, and Welters, Riccardo (2013) The changing nature of inflation control in Australia. In: Proceedings of the 14th Path to Full Employment Conference and the 19th National Conference on Unemployment. pp. 203-214. From: 14th Path to Full Employment Conference and 19th National Conference on Unemployment, 4-5 December 2013, Newcastle, NSW, Australia.

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Abstract

[Extract] It is clear that the official unemployment data significantly underestimates the extent of labour market slack in the Australian labour market. Since the 1991 recession, underemployment has risen dramatically in Australia, a trend common in most OECD countries.

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The paper is laid out as follows. Section 2 outlines the stylised facts of labour underutilisation and inflation in Australia since 1978. It traces the rise in underemployment in Australia to the dynamics that accompanied the 1991 recession, which also saw the relationship between unemployment and underemployment shift, such that higher rates of the latter were experienced at each unemployment rate. Section 3 discusses the conceptual way in which unemployment and underemployment can act as disciplining forces to attenuate inflation with the aim of developing hypotheses that can be subjected to further empirical scrutiny. Section 4 outlines the econometric specific used and presents the results. The fonnal econometric evidence support the proposition that underemployment is a significant negative influence on inflation. It operates independently of unemployment. Concluding remarks follow.

Item ID: 32586
Item Type: Conference Item (Research - E1)
ISBN: 978-0-9873276-4-2
Keywords: unemployment, underemployment, inflation
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Date Deposited: 09 Apr 2014 00:52
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140211 Labour Economics @ 80%
14 ECONOMICS > 1402 Applied Economics > 140212 Macroeconomics (incl Monetary and Fiscal Theory) @ 20%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9101 Macroeconomics > 910107 Macro Labour Market Issues @ 100%
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