Can the Australian exchange rate still be considered a commodity based currency?
Mark Frost and Kevin Parton No 59735, 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia from Australian Agricultural and Resource Economics Society Abstract: The Australian dollar is considered a commodity-based currency, with the high level of primary commodity exports in Australiaâ s trade balance given as an explanation. Key studies have concluded that Australiaâ s terms of trade are a primary driver of the real exchange rate based on a comparative advantage trade model. These studies have been undertaken at an aggregate level where changes in the terms of trade have been assumed as a given. Since the Australian economy was deregulated in the early 1980s, there have been dramatic changes in the structure of the economy. Australiaâ s trading activity has grown and now contributes more within the domestic economy. Similarly the structure and contribution of key imports and exports has also evolved. Furthermore the role of the traded goods and services balance and the i
Author InfoFrost, Mark Parton, Kevin Abstract The Australian dollar is considered a commodity-based currency, with the high level of primary commodity exports in Australiaâ s trade balance given as an explanation. Key studies have concluded that Australiaâ s terms of trade are a primary driver of the real exchange rate based on a comparative advantage trade model. These studies have been undertaken at an aggregate level where changes in the terms of trade have been assumed as a given. Since the Australian economy was deregulated in the early 1980s, there have been dramatic changes in the structure of the economy. Australiaâ s trading activity has grown and now contributes more within the domestic economy. Similarly the structure and contribution of key imports and exports has also evolved. Furthermore the role of the traded goods and services balance and the income balance within the Australian current account balance has also changed, with a significant change occurring in 2003/04. Th
