Money Wages, Consumer Prices, and Causality in Australia*

This paper exploits recently developed statistical techniques to examine the causal patterns in lag relationships between changes in wages and consumer prices. The analysis uses quarterly data for selected periods and a total historical sample period 1954-82. Causation has generally been unidirectional from wages to prices. However, for the first half of the 1970s bidirectional causation was detected, though the causation from wages to prices was statistically more significant. Brief consideration is given to some policy implications of the results.     

The Money Supply in Australia: Prospects for 1984-85

The monitoring and control of the growth of monetary aggregates is an important aspect of monetary policy. The purpose of this article is to assess the likely growth of the money supply for 1984-85. We conclude that the monetary policy of keeping M3 growth within the 8–10 per cent range is attainable and that this can be achieved through the use of open-market operations without creating undue pressure on interest rates.     

A Note on Causality Between Money,Wages and Prices in Australia*

Lead and lag relationships between money, wages. and prices are examined using Australian data. Granger causality tests support univariate causality running from money to both wages and prices. This result is consistent with a monetarist explanation of inflation.     

The Relationship Between Environmentally Sustainable Income, Employment and Wages in Australia

The environment is an asset that provides essential services. Like any other asset, its services will diminish as it depreciates. The environmentally sustainable income of a nation depends on a sustained flow of these services, and can be estimated by including the environment in a macroeconomic framework, with a goal to achieve both full employment and sustainability. The relationship of national income to employment is estimated at full employment, actual employment and the employment level that is necessary to maintain sustainable income, for the Australian economy. There proved to be a widening gap between actual income and environmentally sustainable income, and between actual income and income to guarentee full employment. Wage reduction and improvement of technology are analysed as possible ways to meet the goal of an environmentally sustainable income.     

International Factor Mobility,Wages and Prices

This paper analyzes the joint influence of migration inflows and outward foreign direct investment (FDI) on wage bargaining. Labor migration and offshoring supported by FDI affect wage deals by changing the outside options of workers and firms. Unemployed workers may find alternative jobs either in the legal or in the illegal labor markets. Wages in this latter case are highly affected by migrants crowding this segment more than any other market. Firms may have the option of moving production partly or entirely to foreign low‐cost countries. A wage curve is designed theoretically, reflecting cross‐border labor and capital mobility, and estimated on panel data for 13 European countries over the period 1995–2013. The theoretical predictions of a joint negative effect on wages of FDI outflows and labor migration inflows are confirmed with some novel results.     

Profits,Variability of Profits and the Prices Justification Tribunal*

In 1973 the Prices Justification Tribunal was established and given certain powers over the price-setting practices of large firms in Australia. This paper addresses itself to the impact of that body on firms' markup. Using a large sample of Australian firms observed from 1969 to 1978, this paper establishes evidence that although a statistically significant downward effect on firms' markup can be attributed to the tribunal, in numerical terms the effect has been very small.     

The trend of welfare disparity among subgroups of population in Australia 1983-1984 - 1993-1994

The aim of this paper is to estimate the trend of social welfare for Australia using 1983–1984, 1988–1989 and 1993–1994 Household Expenditure Survey data. The functional form of the Social Welfare Function (SWF) was derived by Sen, Degum, Yitzhaki and Shesinski (all independently). Since the function contains the Gini coefficient as the inequality parameter, it could not be formally disaggregated by subgroups of population. This paper, using a method of subgroup decomposition of the Gini coefficient developed by Podder, attempts to disaggregate the SWF. With this method it is now possible to identify disadvantaged groups by their relative shares in total welfare. In addition the method is used to determine effect of economic growth on specific subgroups, and in turn, on total social welfare. This study is based on the Australian economy. Distribution of relative shares of total social welfare among various regional groups are identified, groups determined by occupational status and groups determined by country of birth. The effect on society's welfare for a percentage change in income of a group and the trend of relative welfare of a specific group are also computed. This information can be used in a variety of social decision making situations, including cost benefit analysis.     

Relative Wages and the Changing Industrial Distribution of Employment in Australia*

A simple model is used to analyze the role of changing relative wages in industry labour market adjustment between 1948–49 and 1979–80. Not with standing Australia's highly centralized system of wage determination, it was found that it has permitted modest changes in wage relativities which were generally in the right direction. To the extent that these changes were sufficient to equilibrate the labour market this probably reflects some important changes in the composition of the labour force and the high elasticity of supply from one industry to another.