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Fiscal policy

Analysis and Comment (16)

European Central Bank President Mario Draghi has called for fiscal policy to lead the way in ending the Eurozone recession. European Central Bank President Mario Draghi has called for fiscal policy to lead the way in ending the Eurozone recession. AAP/EPA/ARNE DEDERT

Draghi calls for spending to rescue Euro – but will governments do ‘whatever it takes’?

In July 2012 European Central Bank president Mario Draghi famously announced that the ECB would do “whatever it takes” to rescue the Euro. And he added: “Believe me, it will be enough.” In fact, it has…
Is Australia on its own ‘Great Gatsby curve’? Is Australia on its own ‘Great Gatsby curve’? Victoria Pickering/Flickr

The Great Gatsby days of inequality and social polarisation

In the popular novel of F. Scott Fitzgerald, James “Jimmy” Gatz (The Great Gatsby) climbs from his poor, rural North Dakotan origins to New York’s high society. His parties are as glamorous as they get…
Prime Minister Tony Abbott and Industry Minister Ian Macfarlane have drawn a line in the sand on industry assistance…or have they? Prime Minister Tony Abbott and Industry Minister Ian Macfarlane have drawn a line in the sand on industry assistance…or have they? Alan Porritt/AAP

SPC Ardmona decision is fiscal policy disguised as industry policy

Announcing the decision to refuse assistance to SPC Ardmona, Industry Minister Ian Macfarlane said: “I think it is a clear delineation of where this government believes we need to go with industry policy…
Servicing the current level of public gross debt is not a problem for Australia. Servicing the current level of public gross debt is not a problem for Australia. Image sourced from www.shutterstock.com

Explainer: the role of budget deficits

There continues to be a great debate around Australia’s fiscal position. Yet, budget deficits are, in fact, a natural outcome of the business cycle. In a policy brief, co-authored by myself and colleagues…
There is an argument that government spending can create economic growth the private sector won’t provide. There is an argument that government spending can create economic growth the private sector won’t provide. Image sourced from www.shutterstock.com

Putting the cart before the horse in the debate over fiscal policy

The economic debate during the election period has centred on the costings of the proposed policies of the major parties. Unfortunately what little “debate” we’ve seen has become a bit like a black hole…
The Bank of England: still the key to growth? The Bank of England: still the key to growth? Yui Mok/PA

Ignore the calls for stimulus and stick with Plan A

Many critics of the coalition government’s “Plan A” argue that it should deviate from deficit reduction plans to instead stimulate growth via additional infrastructure spending. Recent advocates of this…
The Business Council of Australia’s call for long-term thinking is moving in the right direction, but wants both expensive spending programs and lower taxes. The Business Council of Australia’s call for long-term thinking is moving in the right direction, but wants both expensive spending programs and lower taxes.

Business lobby yearns for a long-term view, but offers a contradictory wish list

There is much to consider when thinking about our future as a nation. We are a small, resource-rich, open economy facing a volatile global environment. We are particularly vulnerable to the impact of climate…
Regardless of who wins the 2013 election, citizens and commentators alike are pessimistic about Italy’s economic outlook. Regardless of who wins the 2013 election, citizens and commentators alike are pessimistic about Italy’s economic outlook. AAP

Italy at the crossroads: desperately seeking government in a time of crisis

Italy has had several crucial elections in the past. In 1946, right after the end of World War II, citizens were called to decide between Republic and Monarchy. Two years later, the 1948 general election…
Without serious, structural fiscal reforms — which require bipartisanship and compromise — the US economy could go into free fall. Without serious, structural fiscal reforms — which require bipartisanship and compromise — the US economy could go into free fall. Bungee jump image from www.shutterstock.com

Is the US set to jump off a fiscal cliff?

As we check our political calendars, many look to November 6 as the crucial date that will determine the future direction for US politics and the nation’s ailing economy. But in policy terms, it is January…
Does politics affect the integrity of economic forecasting? Does politics affect the integrity of economic forecasting? K

Independent body needed to preserve integrity of fiscal forecasts

The Melbourne Institute’s recent “Intergen +10” workshop was a retrospective on Australia’s pioneering Intergenerational Reports, an outgrowth of the fiscal responsibility legislation put in place by the…
Size does matter: rather than be concerned about achieving a surplus or a deficit, the government should be focusing on how to manage its debt. Size does matter: rather than be concerned about achieving a surplus or a deficit, the government should be focusing on how to manage its debt. AAP

Don’t forget the debt: there’s more to fiscal prudence than a return to surplus

Treasurer Swan’s commitment to bring the government budget into surplus in 2012-13 may be a political imperative, but is not good economics. The focus for prudential fiscal management should instead be…
The ability of our politicians to achieve a surplus or balance the budget is spuriously taken as a measure of fiscal responsibility. The ability of our politicians to achieve a surplus or balance the budget is spuriously taken as a measure of fiscal responsibility. AAP

Returning to surplus: the policy wall our politicians can’t see over

The Federal Government’s quest to return the budget to surplus raises many questions and not just about what immediate rationale there is on economic grounds for this strategy. It also raises deeper questions…
Unless the US can address structural problems, there no end in sight to this financial crisis. Unless the US can address structural problems, there no end in sight to this financial crisis. AAP

Keep an eye on the underlying economic threat, not market ups and downs

Global share markets were faltering even before the decision by Standard & Poor’s to downgrade the US government’s debt. The slump in share markets over the past week reflects a weaker outlook for…
Australia has long since abandoned the goal of full employment. Australia has long since abandoned the goal of full employment. AAP

Forget surpluses – a government’s true task is to keep us employed

While “deficit fetishism” is unsurprising when championed by Liberal politicians or their counterparts in the centre-unity faction of the Labor Party, it is increasingly advocated by those positioned at…