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RBA Glossary definition for Cash Rate

Cash Rate – The interest rate which banks pay to borrow funds from other banks in the money market on an overnight basis. The cash rate is the Reserve Bank of Australia's operational target for the implementation of monetary policy. It is also an important financial benchmark in the Australian financial markets. It is used as the reference rate for Australian dollar Overnight Indexed Swaps (OIS) and the ASX 30 Day Interbank Cash Rate Futures. The Reserve Bank of Australia is the administrator of the cash rate. The cash rate is calculated as the weighted average interest rate on overnight unsecured loans between banks settled in the Reserve Bank Information and Transfer System (RITS). The Cash Rate is also known by the acronym AONIA in financial markets.

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Methodology

19 Dec 2023 RDP 2023-09
We allow the shock to enter the model directly, similar to Durante et al (2022), rather than using it as an instrument for changes in the cash rate. ... That said, the results are reasonably robust to using the shock as an instrument for cash rate changes
https://www.rba.gov.au/publications/rdp/2023/2023-09/methodology.html

Adoption of Emerging Digital General-purpose Technologies: Determinants and Effects

19 Dec 2023 RDP PDF 1692KB
to adopt, and those with higher cash ratios also being slightly more likely, consistent with findings. ... Assets (log) Return on assets Positive. cash flow. Cash ratio Labour share of.
https://www.rba.gov.au/publications/rdp/2023/pdf/rdp2023-10.pdf

Appendix C: Additional Microdata Results

19 Dec 2023 RDP 2023-09
IV approach, full sample. Notes: Monetary policy shock is instrumented via cash rate.
https://www.rba.gov.au/publications/rdp/2023/2023-09/appendix-c.html

Appendix B: Aggregate Data Results

19 Dec 2023 RDP 2023-09
100 basis point monetary policy shock, VAR model. Notes: Small VAR with (log) real trade-weighted index, (log) consumption, (log) non-mining business investment, (log) dwelling investment and cash rate.
https://www.rba.gov.au/publications/rdp/2023/2023-09/appendix-b.html

Conclusion

19 Dec 2023 RDP 2023-09
The effects appear similar across firm age groups, suggesting that the aging of the firm population that has occurred due to declining firm entry rates should not have weakened the effect ... The effects are also similar across firm sizes. This suggests
https://www.rba.gov.au/publications/rdp/2023/2023-09/conclusion.html

Introduction

19 Dec 2023 RDP 2023-09
borrowing rates) – the ‘user cost of capital’; and loosening credit and financing constraints by freeing up cash flow for indebted firms or raising the value of collateral that firms can pledge ... This highlights the important role that cash flow
https://www.rba.gov.au/publications/rdp/2023/2023-09/introduction.html

Results with Tax Data on Actual Investment

19 Dec 2023 RDP 2023-09
For example, the decline in the cash rate following the shock in Beckers (2020) is much more persistent than that implied by the Taylor rules in MARTIN or the RBA's ... As such, we may not be comparing like for like. Following an initial shock of 100
https://www.rba.gov.au/publications/rdp/2023/2023-09/results-with-tax-data-on-actual-investment.html

Effect on Expectations with Survey Data

19 Dec 2023 RDP 2023-09
Taken together, these findings suggest that firms' expectations are largely based on current investment and conditions, rather than reflecting future conditions and how interest rates will affect those conditions. ... However, firms may only realise that
https://www.rba.gov.au/publications/rdp/2023/2023-09/effect-on-expectations-with-survey-data.html

Does Monetary Policy Affect Non-mining Business Investment in Australia? Evidence from BLADE

11 Dec 2023 RDP 2023-09
Gulnara Nolan, Jonathan Hambur and Philip Vermeulen
This suggests that evidence that some, particularly large, firms have sticky hurdle rates does not mean that they do not respond to monetary policy. ... We find evidence that financially constrained firms, and sectors that are more dependent on external
https://www.rba.gov.au/publications/rdp/2023/2023-09.html
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Read me file for Does Monetary Policy Affect Non-mining Business Investment in Australia? Evidence from BLADE

10 Dec 2023 RDP PDF 160KB
RDP 2023-09 supplementary information
https://www.rba.gov.au/publications/rdp/2023/2023-09/rdp-2023-09-read-me.pdf