Quantifying the effect of GST on inflation in eight Australian cities: an intervention analysis

Valadkhani, Abbas and Layton, Allan P. (2004) Quantifying the effect of GST on inflation in eight Australian cities: an intervention analysis. Australian Economic Review, 37 (2). pp. 125-138. ISSN 0004-9018


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This article examines the magnitude and duration of the effect of the Goods and Services Tax(GST) on inflation in Australia's eight capital cities using the Box and Tiao intervention analysis and quarterly data spanning from
1948:4 to 2003:l. We found that the GST had a significant but transitory impact on inflation only in the September quarter of 2000 when this new tax system was implemented. In this quarter inflation showed an additional increase of 2.6 per cent in Sydney (minimum effect) and 2.8 per cent in Australia as a whole, and the figure for Hobart was 3.3 per cent (maximum effect). Based on Wald test results, we also found some evidence that there is no significant (or substantial) difference in the average price changes among capital cities. We could not reject the null hypothesis that the GST increased the consumer price index by 2.8 per cent across the board in various cities. These results are also consistent with previous studies and surveys.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to paper due to publisher copyright restrictions. The definitive version is available at the URL above at www.blackwell-synergy.com
Faculty / Department / School: Historic - Faculty of Business - No Department
Date Deposited: 11 Oct 2007 01:16
Last Modified: 02 Jul 2013 22:48
Uncontrolled Keywords: Good and Services Tax; GST; price increases; inflation; intervention analysis
Fields of Research : 14 Economics > 1402 Applied Economics > 140215 Public Economics-Taxation and Revenue
14 Economics > 1403 Econometrics > 140302 Econometric and Statistical Methods
14 Economics > 1403 Econometrics > 140305 Time-Series Analysis
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970114 Expanding Knowledge in Economics
Identification Number or DOI: 10.1111/j.1467-8462.2004.00314.x
URI: http://eprints.usq.edu.au/id/eprint/2909

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