Authors calculations and AUS M model database and simulations RBA Our estimated

Authors calculations and aus m model database and

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Authors’ calculations and AUS-M model database and simulations; RBA Our estimated response of interest rates differs from Plumb et al (2013, Figure 3), who suggest that, in theory, interest rates might initially rise in response to an increase in world mining prices. One possible explanation for the difference is that we estimate a larger weight on the response of interest rates to lower inflation arising from the exchange rate appreciation. 5. Sectoral Responses 5.1 Household Income and its Components The mining boom is estimated to raise household income through several different channels, shown in Figure 9. As of 2013, the population is about 1 per cent larger than in the counterfactual, reflecting the response of net migration flows to relative job opportunities and higher real wages. Employment is 3 per cent higher, largely due to the boost to aggregate demand. Real consumer wages are about 6 per cent higher, reflecting the effect of the higher exchange rate on import prices. A larger tax base leads to lower average tax rates, which help raise household disposable income by about 13 per cent. Household income is also supported by higher property income, reflecting higher wealth, in turn attributable to higher equity
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