The relative impact of the US and Japanese business cycles on the Australian economy

Hyun Hoon Lee, Hyeon Seung Huh, David Harris

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


The purpose of this paper is to assess the relative impact of the US and Japanese business cycles on the Australian economy. Our vector autoregression (VAR) models included real domestic products (GDPs) of three countries and world average oil price, which are quarterly covering the period 1959:3-1996:4. In order to take account of a possible stuctural change, estimates are also made separately for the fixed exchange rate and flexible exchange rate periods. The rolling regression technique is utilised to trace the patterns and extents of changing importance between th US and Japan's impacts on the Australian economy. We find that over the entire sample period, the business cycles of both the US and Japan have the significant impacts on movements in Australian GDP. Under the recent flexible exchange rates, however, the impact of US output becomes greater, while the Japanese impact becomes smaller and negative. It also appears that US output has significant impacts in both short and longer term, while Japanese output has little impact in the short term, but greater impact in the longer term.

Original languageEnglish
Pages (from-to)111-129
Number of pages19
JournalJapan and the World Economy
Issue number1
Publication statusPublished - 2003 Jan

Bibliographical note

Funding Information:
This paper was written while Lee and Huh were at the University of Melbourne. The authors wish to thank the editor of this journal and an anonymous referee along with participants at the University of Melbourne Economics Workshop and the 1999 Conference of the Korea International Economic Association for helpful comments. This research was supported by the Hallym Academy of Sciences at Hallym University in South Korea. All remaining errors are the authors’ own.

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations


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