The first is that the paper by Alan Taylor and Oscar Jorda at this symposium points us in the right direction. Any individual country’s interest rates are partly determined by global factors that are difficult to resist and often difficult to predict. This means that we need to pay close attention to these global factors in our decision-making.
At the Reserve Bank of Australia we are very conscious of these global forces. We still feel that, thanks to our floating exchange rate, we have a high degree of monetary autonomy from a cyclical perspective. So from that viewpoint, the textbook still applies.