RDP 2009-05: Macroeconomic Volatility and Terms of Trade Shocks Appendix A: Data Descriptions and Sources

Real GDP per capita and its expenditure components in constant 2000 US dollars (World Bank, World Development Indicators).

Inflation: Year-ended percentage change in the consumer price index (World Development Indicators).

Terms of trade: Export price index divided by import price index. Where possible, these data have been sourced from the World Development Indicators. Where these data are unavailable, we have spliced data from the Penn World Tables (Heston, Summers and Aten 2002). Data for 2006–2008 for industrialised economies (including Australia) are sourced from the OECD. Data for 2009 are forecasts, sourced from the OECD Economic Outlook No 85.

Private credit: Ratio of domestic credit claims on the private sector to GDP (World Development Indicators).

Exchange rate flexibility: Dummy variable taking a value of one if an economy's exchange rate regime is classified as either floating or managed floating according to Reinhart and Rogoff (2004), and zero otherwise.

Strict monetary policy regime: Dummy variable indicating if an economy has a formal inflation targeting regime or if it behaved as if it had a formal inflation target. Formal inflation targeters are sourced from IMF (2006). In addition, Germany, Japan and Switzerland are assigned a value of one throughout the sample, while the United States is assigned a value of one from 1981. All economies that are part of the euro area are assumed to have a strict monetary policy.

Openness: The sum of exports and imports of goods and services divided by gross domestic product. All data are in current price local currency terms (World Development Indicators).

Labour market flexibility: The index of labour market regulations component of the Economic Freedom of the World Index published by the Fraser Institute. The index assigns economies a labour market flexibility index rating between one (least flexible) and ten (most flexible). The index is based on an economy's mandated minimum wage as a proportion of average value added per worker, the extent of regulations impeding the hiring and firing of workers, the extent of centralised wage bargaining, the mandated cost of hiring workers (including social security and payroll taxes), the mandated cost of worker dismissal, and the use and duration of conscription (Gwartney and Lawson 2008).

Union density: The log of the ratio of trade union members to the total workforce (Rama and Artecona 2002).

Trading partner output volatility: The log of the output volatility of each country's ten largest trading partners, aggregated using bilateral nominal export shares sourced from the IMF's Direction of Trade Statistics. A country's top ten trading partners is initially determined on the basis of average bilateral trade flows between 1980 to 2005. The export shares of each country's top ten trading partners are normalised to one in order to construct export weights, and these export weights are allowed to vary at five-year intervals.