The Trickle‐down Effect of the Mining Boom in Australia: Fact or Myth?

This paper examines the relationship between the output levels in the mining sector and various non‐mining sectors in an attempt to understand the role of the mining sector in Australia. The unobserved components time series model is used to estimate the effects of the output gap and the growth regime in the mining sector on the output level of each of several non‐mining sectors. Overall, the estimates obtained do not suggest an overwhelmingly positive effect running from the mining sector to other production and services sectors, implying that the trickle‐down effect of the mining boom may be a myth.