Quantifying Australia's 'Three-Speed' Boom

© 2016 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research. We conjecture that a 'secondary services boom' is primarily responsible for the widespread nature of the gains in employment during Australia's recent 'China boom'. An economy-wide model provides numerical theory for constructing hypotheses, which are tested econometrically. Predictions that include a services expansion and de-industrialisation are tested against pre-boom data and out-of-sample simulations through the boom. The secondary services boom appears clearly in both income and employment, though the effects on manufacturing are ambiguous, with stronger-than-hypothesised observed performance, suggesting that changes in industrial structure and the composition of assistance have favoured surviving manufacturing firms.