Research grants

Discovery projects

Funding commencing in 2018

Monetary Policy, Redistribution and Endogenous Asset Market Incompleteness

Dr Tim Kam & A/Prof Junsang Lee

Recent economic crises, growing wealth-inequality and housing-affordability concerns have led to much repurposing of monetary and fiscal policies. This project focuses on monetary policy. New quantitative theories with new efficient computational methods is developed, to understand and to quantify how monetary policy affects not just the dynamics of aggregate outcomes (e.g., inflation or employment), but also the distribution of individual level wealth (e.g., money, capital and housing). Redistribution of wealth from an international perspective where monetary policy must also consider international policy spillover effects will also be considered.

Inequality of health, wealth and education in China

Prof Xin Meng, Professor Loren Brandt, Professor Hongbin Li, Dr Guochang Zhao 

Significant increases in income and wealth inequality could have detrimental effects on economic and political stability. In China gini coefficient increased from around 0.28 in 1980, among the lowest in the world, to around 0.60 in 2012, one of the highest in the world. This project examines whether the substantial increase in income inequality is also associate with substantial increase in inequalities in other well-being related outcomes: health, education and wealth, and what are the factors associated with the increase in inequalities in these outcomes. The results from this project may help to identify policies useful in combat these inequalities. Being Australia's important trading partner, China's stability will benefit Australia

Funding commencing in 2014

Height, Body Mass Index and Demographic Changes in the Asian Giants

Prof Timothy Hatton, Prof Xin Meng and Dr Daniel Suryadarma

This project aims to examine and explain trends in height and body mass index of the populations of the three Asian Giants, China, India and Indonesia, and to explore the links with two key demographic developments: fertility decline and urbanization. The three parts of the project are (a) Using anthropometric survey data on adults, to compare, contrast and analyse trends at the national and regional levels; (b) To examine the relationship between adult height and childhood family size using econometric methods that account for possible endogeneity; (c) To examine the link between individual BMI and rural or urban residence paying special attention to rural-urban migrants.

Funding commencing in 2013

Optimal taxation when the allocation of time matters

A/Prof M Racionero; Prof AL Booth; Em/Prof P Pestieau

This project aims to incorporate evidence-based models of time allocation, which go beyond the simple division between work and leisure, in optimal tax settings. This approach will help to inform the public policy debate on child support, by questioning whether, and if so how, to subsidise childcare, where parental time use plays a crucial role.

General market equilibrium analysis of securitisable assets in the presence of private information, when contracts are incomplete

Prof R Pitchford; Prof R Tourky

Three key markets (among others) were involved in the gestation of the worst financial crisis seen since the great depression: the market for mortgages and the market for securities, backed by mortgages and housing market. The focus of this project is to examine financial fragility in such markets, theoretically applying outcomes to Australian policy.

Time-consistent macroeconomic policy in nonlinear models

Prof R Dennis; Prof T Kirsanova

Efforts to use fiscal policy for macro-stabilisation have led to elevated debt levels and possible default in many countries. This project examines the appropriate design of fiscal policy and its implications for debt over the business cycle.

Funding commencing in 2012

Estimation of the Continuous Piecewise Linear Model and Macroeconomic Application

Prof Rabee Tourky, Dr Rodney Strachan and Dr Fabrizio Carmignani

The project consists of two components. The contribution of the first component is to develop methods to estimate the continuous piecewise linear model (CPLM) and to conduct inference on the model. The contribution of the second component is to use the CPLM and the new inferential techniques to analyse a number of macroeconomic applications where non-linearities and threshold effects give rise to kinked functions. Examples of these applications are the estimation of (I) non-linear monetary policy reaction functions, (ii) monetary and fiscal policy multipliers, (iii) the pass-through of exchange rate and international commodity prices , and (iv) the threshold effects of inflation and resource intensity on growth.

A new approach to stability analysis for economic systems

Prof J Stachurski; Prof T Kamihigashi

This project will provide a new methodology for analysing stability in economic systems. By enhancing our understanding of stability and instability in markets for assets, credit, commodities and natural resources, this project will help economists forecast likely outcomes and improve the formulation of related economic policy.

Commodity cycles

A/Prof R Fry

The implications of resource demand by emerging markets are issues policy makers need to understand. This project address these by focusing on currency, equity and commodity linkages, the financial market and macroeconomic effects of currency collapse, and the role of emerging markets in mitigating/amplifying economic shock transmission.

Estimation of the continuous piecewise linear model and macroeconomic applications

Prof R Tourky; Dr RW Strachan; Dr F Carmignani

Relationships between economic variables are often characterised by non-linearities. This project develops a method to analyse a type of non-linearity that is frequently encountered in economics and uses this method to study four specific applications concerning the dynamics of inflation, growth.

Estimating the impact of fiscal stimulus on household expenditure

Dr Ralf Steinhauser, Dr Emma Aisbett, Dr Markus Brueckner, Ms L iyi Pan

The tax bonus payments of the $42 billion Nation Building and Jobs Plan were among the largest fiscal policy packages in the developed world. This project applies a new methodology to estimate the short-term impact of this cash handout on consumer spending, allowing better modelling of the Australian economy.

Linkage projects

Funding commencing in 2014

A New Phase and New Issues of Rural-Urban Migration in China

Prof Xin Meng, Prof Bob Gregory, Prof. Richard Freeman, Prof. Xiaolu Wang, Ms Helena Bordie and Mr Liangming Lyu

China’s urbanisation has come to a turning point.  The large pool of rural young workers (16-25 years of age), which fed the industrialisation needs of the 1990s and 2000s, has exhausted.  Future growth needs to rely on the increase in the length of stay of the existing migrants and the increase in older new migrants.  Due to this shift, the institutional restrictions, which deter family migration, become the key challenge.  This project examines the cost of the migration restrictions (shortened labour supply and reduced human capital accumulation for the current and next generation migrants: their education, health and pro-social behaviour); and the best way to reform the restrictions on family migration and the priority for the reform.

Funding commencing in 2012

Estimating the impact of fiscal stimulus on household expenditure

Dr Ralf Steinhauser, Dr Emma Aisbett, Dr Markus Brueckner, Ms L iyi Pan

The tax bonus payments of the $42 billion Nation Building and Jobs Plan were among the largest fiscal policy packages in the developed world. This project applies a new methodology to estimate the short-term impact of this cash handout on consumer spending, allowing better modelling of the Australian economy.

Discovery Early Career Researcher Award

Funding commencing in 2014

New approaches to estimating nonlinear time-varying macroeconometric models (Completed)

Dr Joshua Chan

Quantitative models are essential for formulating good policies. In a changing world, the analysis should be based on models that allow the behaviour of the economy to change over time. Due to computational limitations, however, one is often restricted to linear models, even when nonlinear ones are more appropriate. This project aims to develop new methods for estimating time-varying nonlinear models. Two important applications are also considered: one investigates how the zero lower bound on interest rates affects the monetary policy transmission mechanism; and, the other examines how uncertainties about monetary and fiscal policy affect economic growth and inflation. This project will have strong practical significance for conducting macroeconomic policy.

Funding commencing in 2012

Understanding industrialisation, entrepreneurship, and technology adoption in emerging economies: new evidence from historical Japanese firms

Dr John P Tang

Japan's pre-war industrialisation is widely used as a model by emerging economies, despite a lack of detailed data. This project provides a new firm-level dataset from hitherto unused archives, which allows empirical testing of theories about entrepreneurial activity, technology adoption, financial access, and other determinants of economic growth.

Australian Research Council fellowships

Funding commencing in 2016

Advanced computational methods for solving modern asset pricing models

Professor John Stachurski

Movements in asset prices have large and enduring effects on private investors, public sector finances, the distribution of wealth in our society and the level of business activity. In recent years, economists have worked hard to build better models of asset prices, moving away from hyper-rationality and towards realistic features such as heterogeneity, habit persistence and bounded rationality. Unfortunately, the additional complexity involved in these models makes them difficult to solve, hampering our ability to apply them to real world problems. This project aims to provide a systematic, innovative and comprehensive set of solution methods for such asset pricing models, from numerical analysis to computer implementation.

Income and Well-Being: Evidence from International Commodity Price Shocks

Professor Markus Brueckner

The research project will examine effects of income -- arising from international commodity price windfalls -- on peoples’ well-being. Both objective and subjective measures of well-being will be analysed. The project will be empirical in nature. It will have two levels of analysis. The first level is at the cross-country time-series level. The second level of analysis is at the sub-national level, tailored to the Australian economy. Exports of naturalresources, such as iron, coal and copper, are an important source of income for the Australia economy. The international prices for these commodities have declined in recent years, causing a drop in national income. It is important to understand how this affects the well-being of Australians.

Funding commencing in 2012

Innovative Health Financing Systems under Demographic Shift

Dr Chung Tran

This project develops an analytical tool to investigate the challenge of financing health care under demographic shift and macroeconomic implications. By examining various designs of health insurance systems, it aims to identify a set of optimal cost-sharing strategies in response to such growing health care costs.

Life Choices and Policy: Policy Analysis with Non-standard Preferences

Dr Cagri Kumru

This research program takes as its point of departure the often-observed inconsistencies between the behaviour implied by standard economic consumer preference functions and individual and household behaviour that is actually observed. These inconsistencies have led to a range of suggestions for alternative formalisations of preferences in the Economics literature. More recently, there have been isolated attempts to embed these in life-cycle and overlapping generations (OLG) models, to explore their lifetime utility and aggregate economic impacts, and their implications for policy. This proposal will build on these contributions to systematise the exploration of non-standard preferences that aim to capture aspects of human behaviour such as temptation, lack of self-control, and myopia. It will take documented behavioural traits and formalise them to allow tractability within life cycle and OLG models.

Non-ARC Grants

Funding commencing in 2014

Alfred P. Sloan Foundation Grant

Professor John Stachurski, Nobel Laureate Professor Thomas J. Sargent

The project aims to significantly enhance the computational skills and tools in the economics profession.