Research Discussion Paper – RDP 7801 Two Essays in Monetary Economics


These papers present some thoughts on monetary economics. They are the views of someone who is concerned to put empirical magnitudes on theoretical constructs. The essays are therefore concerned with the dynamics of adjustment as well as the long run equilibrium properties of economic models. One function is to set out the theoretical basis for our work on the RBA76 model of the Australian economy, but this is done in a much broader context than is appropriate for papers reporting the results of empirical work.

The first essay was published in Kredit und Kapital in 1976. The second will appear in the proceedings of the Pacific Basin Central Bank conference on econometric modelling, which was held in Wellington, New Zealand in 1977. In each case, some minor changes have been made to increase the readability of the essays. This material is presented in the current format as the originals are unlikely to be readily available in Australia, and some of the ideas contained in them may be of interest to Australian economists.