NB: Please note this Economics PhD Seminar starts 2.00pm-3.30pm.

This paper analyses the output composition of the monetary policy transmission mechanism in Australia. We use four VAR models and the measures as in Fujiwara (2004) and Angeloni et al (2003) to estimate the consumption and investment contributions in output reactions to a shock of nominal interest rate. The results suggest that the investment channel plays a more important role compared to the consumption channel, which means the Australia case is more similar to Euro area and Japan rather than the US case. This conclusion raises an issue on the true reasons behind the diôØerences between countries in terms of the output composition of the monetary policy transmission mechanism, and whether the US is the only case with “output composition puzzle”.