In this seminar Aubrey Poon will provide an overview of his recent paper, Assessing the Synchronicity and Nature of Australian State Business Cycles.

This paper estimates a time-varying Panel Bayesian vector-autoregression from Canova and Ciccarelli (2009) to assess the synchronicity and the nature of Australian state business cycles. The study found no posterior evidence that the common indicator significantly contributes to the co-movement in investment, retail turnover, employment and consumption growths across the eight Australian states and Territories. However, the common indicator found by the author, does appear to capture some interesting economic facts. Firstly, the common indicator captures the early 1990’s recession and the Global Financial Crisis that the Australian economy experienced during this sample period; this suggests there is commonality across each Australian states and territories during a contraction. Secondly, the fluctuations of the common indicator closely follow the trend line of the Organisation for Economic Co-operation and Development composite leading indicators for Australia. In terms of Australian state business cycles, Aubrey Poon found evidence that on average the degree of sychronisation across the Australian States and Territories cycles has decreased about half in terms of correlation, between the 1990’s to 2000’s. In terms of the Global Financial Crisis, the author found that the fall in consumption growth was the main factor driving the negative effects of this crisis across the majority of states. However, it was state-specific idiosyncratic factors that were the dominant features, during this slowdown, in the South Australian and Northern Territory economies.

Aubrey Poon is a PhD student at the Research School of Economics at ANU. His main field of research is in macroeconometrics and DSGE modelling. He is particularly interested in the application of Bayesian estimation and computation of time-varying parameter and DSGE models.

The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.