interest rates. Jääskelä and Smith (2011) examine effects on the Australian economy of changes in the terms of trade arising from: (1) an increase in world demand; (2) developments in individual commodity markets; and (3) globalisation and the rise of Asia, where rising commodity demand and prices are accompanied by lower manufacturing prices. The estimated impacts are markedly different for output, inflation and the exchange rate. There have been numerous applications of these general principles to recent Australian developments, including Connolly and Orsmond (2011), Sheehan and Gregory (2012), Minifie et al(2013), Plumb, Kent and Bishop (2013), Edwards (2014) and other references we cite below. Although we use a similar analytical framework to most of these papers, our work differs in that we quantify the timing and magnitude of economic responses. Specifically, we construct a counterfactual for how the economy would have evolved without the boom; comparisons with this scenario distinguish the effects of the mining boom from developments that would have occurred anyway. Our empirically grounded counterfactual lets us discuss effects in greater detail.