An Investigation into the Major Causes 01 Australia's Recent Inflation and Some Policy Implications*

Abstract

This paper investigates the major causes of Australia's recent inflation with special emphasis on the 1970s and early 1980s A general model of inflation is formulated based upon a vector auto‐regression The main empirical finding is that increases in wages and import prices and more recently in money have been significant causal factors of Australia's inflationary experience. Government current expenditure is found to contribute passively to cost‐push inflation