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Quantifying the Effect of GST on Inflation in Australia’s Capital Cities: An Intervention Analysis: Discussion Paper No 153

Valadkhani, Abbas & Layton, Allan P. (2003) Quantifying the Effect of GST on Inflation in Australia’s Capital Cities: An Intervention Analysis: Discussion Paper No 153. [Working Paper] (Unpublished)

Abstract

This paper examines the magnitude and duration of the GST effect on inflation in Australia’s eight major capital cities using the Box and Tiao intervention analysis and quarterly data spanning from 1948:4 to 2003:1. We found that 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, the same figure for Hobart was 3.3 per cent (maximum effect). Based on the Wald test results, we have also found some evidence that there is no significant (or substantial) difference in the average price changes among major capital cities. We could not reject the null hypothesis that GST increased the CPI by 2.8 per cent across the board in various cities. These results are also consistent with previous studies/surveys.

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ID Code: 423
Item Type: Working Paper
Keywords: Intervention Analysis, State and Local Taxation, Australia
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 2003 (please consult author)
Deposited On: 10 Sep 2004
Last Modified: 02 Feb 2012 19:44

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