Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.01
J. Laurenceson
This paper suggests Australia’s economic exposure to China creates three distinct risks: a Chinese growth shock that comes with a ‘hard landing’, a structural shift towards less import and natural resources–intensive Chinese growth, and the Chinese Government disrupting trade ties for coercive purposes. With external demand for Australia’s goods and services largely exogenous, the scope to mitigate these risks by reducing exposure to China, without resorting to costly market intervention, is limited. At the same time, the probability and scale of each risk should not be overstated. Further undercutting the case for an intrusive public policy approach is the fact that effective mitigation mechanisms exist for the Australian economy as a whole, as well as for many businesses.
{"title":"ssessing the risks from Australia’s economic exposure to China","authors":"J. Laurenceson","doi":"10.22459/ag.28.01.2021.01","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.01","url":null,"abstract":"This paper suggests Australia’s economic exposure to China creates three distinct risks: a Chinese growth shock that comes with a ‘hard landing’, a structural shift towards less import and natural resources–intensive Chinese growth, and the Chinese Government disrupting trade ties for coercive purposes. With external demand for Australia’s goods and services largely exogenous, the scope to mitigate these risks by reducing exposure to China, without resorting to costly market intervention, is limited. At the same time, the probability and scale of each risk should not be overstated. Further undercutting the case for an intrusive public policy approach is the fact that effective mitigation mechanisms exist for the Australian economy as a whole, as well as for many businesses.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44479587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.04
S. Davidson
This paper documents the increase in Australian public debt since 2007-In that year, gross public debt had a face value of $55 billion, while net debt was negative- It is not surprising that governments have since resorted to public debt to respond to a series of shocks to the Australian economy. What is surprising is that Australian policymakers have abandoned the 'old-time fiscal religion'.
{"title":"From debt to eternity","authors":"S. Davidson","doi":"10.22459/ag.28.01.2021.04","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.04","url":null,"abstract":"This paper documents the increase in Australian public debt since 2007-In that year, gross public debt had a face value of $55 billion, while net debt was negative- It is not surprising that governments have since resorted to public debt to respond to a series of shocks to the Australian economy. What is surprising is that Australian policymakers have abandoned the 'old-time fiscal religion'.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49576105","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.06
S. Kirchner
The Reserve Bank of Australia (RBA) has been overly wedded to a New Keynesian conception of the monetary policy transmission mechanism, in which the official cash rate is seen as the main instrument for policy implementation and the main measure of the stance of monetary policy. The ‘effective lower bound’ on the official cash rate became an artificial, selfimposed constraint on the RBA’s initial response to the Covid-19 pandemic. By contrast, a monetarist conception of the monetary transmission mechanism would have encouraged more rapid adoption of alternative operating instruments. Reserve Bank of Australia Governor Phillip Lowe characterised the Covid-19 pandemic as the worst shock to the Australian economy in 100 years. Yet the bank’s initial response to the pandemic in March 2020 was limited, seeking to exhaust the possibilities of its pre-pandemic operating instruments. While Australia’s fiscal policy response was in line with that of other advanced economies, its monetary response, measured by the expansion in its balance sheet, lagged that of its G10 peers. Only in November 2020 did the RBA resort to alternative operating instruments to play catch-up with other central banks. In the intervening period, Australia’s fiscal and monetary policy mix saw the Australian dollar outperform its G10 peers—a classic case of open-economy crowding-out. 1 United States Studies Centre, University of Sydney; stephen.kirchner@sydney.edu.au. The author’s newsletter can be found at stephenkirchner.substack.com. AGENDA, VOLUME 28, NUMBER 1, 2021 106 This article will argue that the RBA was overly wedded to a New Keynesian conception of the monetary policy transmission mechanism, in which the official cash rate is seen as the main instrument for policy implementation and the main measure of the stance of monetary policy. The ‘effective lower bound’ on the official cash rate became an artificial, self-imposed constraint on the RBA’s initial pandemic response. In contrast, a monetarist conception of the monetary transmission mechanism would have encouraged more rapid adoption of alternative operating instruments. Before the pandemic, Governor Lowe signalled his reluctance to embrace alternative operating instruments, questioned their effectiveness and hinted vaguely at unwelcome costs associated with easier monetary policy (Lowe, 2019). Both before and during the pandemic, Lowe called on federal and state governments to do more with fiscal and structural policy, implicitly conceding that macroeconomic policy settings were inadequate, even though the RBA itself had scope to do more. The RBA eventually embraced quantitative easing (QE), from November 2020, with an aggressive program of longer-duration outright Commonwealth and semigovernment bond purchases. The RBA conceded that its failure to expand its balance sheet as had other central banks had put upward pressure on the exchange rate. While the RBA has committed to maintaining what it sees as accommodative po
{"title":"The Reserve Bank of Australia’s pandemic response and the New Keynesian trap","authors":"S. Kirchner","doi":"10.22459/ag.28.01.2021.06","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.06","url":null,"abstract":"The Reserve Bank of Australia (RBA) has been overly wedded to a New Keynesian conception of the monetary policy transmission mechanism, in which the official cash rate is seen as the main instrument for policy implementation and the main measure of the stance of monetary policy. The ‘effective lower bound’ on the official cash rate became an artificial, selfimposed constraint on the RBA’s initial response to the Covid-19 pandemic. By contrast, a monetarist conception of the monetary transmission mechanism would have encouraged more rapid adoption of alternative operating instruments. Reserve Bank of Australia Governor Phillip Lowe characterised the Covid-19 pandemic as the worst shock to the Australian economy in 100 years. Yet the bank’s initial response to the pandemic in March 2020 was limited, seeking to exhaust the possibilities of its pre-pandemic operating instruments. While Australia’s fiscal policy response was in line with that of other advanced economies, its monetary response, measured by the expansion in its balance sheet, lagged that of its G10 peers. Only in November 2020 did the RBA resort to alternative operating instruments to play catch-up with other central banks. In the intervening period, Australia’s fiscal and monetary policy mix saw the Australian dollar outperform its G10 peers—a classic case of open-economy crowding-out. 1 United States Studies Centre, University of Sydney; stephen.kirchner@sydney.edu.au. The author’s newsletter can be found at stephenkirchner.substack.com. AGENDA, VOLUME 28, NUMBER 1, 2021 106 This article will argue that the RBA was overly wedded to a New Keynesian conception of the monetary policy transmission mechanism, in which the official cash rate is seen as the main instrument for policy implementation and the main measure of the stance of monetary policy. The ‘effective lower bound’ on the official cash rate became an artificial, self-imposed constraint on the RBA’s initial pandemic response. In contrast, a monetarist conception of the monetary transmission mechanism would have encouraged more rapid adoption of alternative operating instruments. Before the pandemic, Governor Lowe signalled his reluctance to embrace alternative operating instruments, questioned their effectiveness and hinted vaguely at unwelcome costs associated with easier monetary policy (Lowe, 2019). Both before and during the pandemic, Lowe called on federal and state governments to do more with fiscal and structural policy, implicitly conceding that macroeconomic policy settings were inadequate, even though the RBA itself had scope to do more. The RBA eventually embraced quantitative easing (QE), from November 2020, with an aggressive program of longer-duration outright Commonwealth and semigovernment bond purchases. The RBA conceded that its failure to expand its balance sheet as had other central banks had put upward pressure on the exchange rate. While the RBA has committed to maintaining what it sees as accommodative po","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45761706","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.02
D. Blackmur
{"title":"International resonances of the #FeesMustFall movement in South African universities, 2015–2017","authors":"D. Blackmur","doi":"10.22459/ag.28.01.2021.02","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.02","url":null,"abstract":"","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48382940","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.07
J. Pincus
This paper argues that the best reason for discouraging public debt is that such discouragement acts as a constraint on government spending.
本文认为，抑制公共债务的最佳原因是这种抑制对政府支出的约束。
{"title":"Which public debt should be paid off?","authors":"J. Pincus","doi":"10.22459/ag.28.01.2021.07","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.07","url":null,"abstract":"This paper argues that the best reason for discouraging public debt is that such discouragement acts as a constraint on government spending.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43503457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.05
S. Eslake
It is widely asserted-and believed-across the Australian political spectrum that small business is the 'engine room' or 'backbone' of the economy. This belief is, however, without any evidentiary foundation whatsoever. In aggregate, Australian small businesses have not created a single job since before the Global Financial Crisis. Small businesses have, on average, been consistently less innovative than medium-sized and large businesses. Small businesses pay lower wages, on average, than medium-sized and large businesses, and they have significantly lower labour productivity. It would be a mistake to perpetuate the preferential treatment of small businesses simply because they are small, and for no other reason, once the pandemic is over. If preferential tax treatment and other forms of assistance are to be afforded to any businesses, it should be to new businesses, rather than small ones.
{"title":"The costs and consequences of ‘small business fetishism’","authors":"S. Eslake","doi":"10.22459/ag.28.01.2021.05","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.05","url":null,"abstract":"It is widely asserted-and believed-across the Australian political spectrum that small business is the 'engine room' or 'backbone' of the economy. This belief is, however, without any evidentiary foundation whatsoever. In aggregate, Australian small businesses have not created a single job since before the Global Financial Crisis. Small businesses have, on average, been consistently less innovative than medium-sized and large businesses. Small businesses pay lower wages, on average, than medium-sized and large businesses, and they have significantly lower labour productivity. It would be a mistake to perpetuate the preferential treatment of small businesses simply because they are small, and for no other reason, once the pandemic is over. If preferential tax treatment and other forms of assistance are to be afforded to any businesses, it should be to new businesses, rather than small ones.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46778829","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.03
S. Anthony
This paper asks whether the suite of unorthodox monetary policies (including quantitative easing, or QE) really make sense in the presence of a global liquidity trap. It finds that QE-type policies are an expedient remedy for short-term crisis management, but their ongoing and expanded use have distorted global markets and will have significant dynamic efficiency costs over the next decade. The alternative is for discretionary fiscal policy to play a bigger role in stabilisation, with monetary policy left to accommodate. Both policies should be operated by a single agency accountable to the electorate.
{"title":"Is quantitative easing good policy?","authors":"S. Anthony","doi":"10.22459/ag.28.01.2021.03","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.03","url":null,"abstract":"This paper asks whether the suite of unorthodox monetary policies (including quantitative easing, or QE) really make sense in the presence of a global liquidity trap. It finds that QE-type policies are an expedient remedy for short-term crisis management, but their ongoing and expanded use have distorted global markets and will have significant dynamic efficiency costs over the next decade. The alternative is for discretionary fiscal policy to play a bigger role in stabilisation, with monetary policy left to accommodate. Both policies should be operated by a single agency accountable to the electorate.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44715530","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.08
M. Terrill
Transport infrastructure investment has been used as a crude tool in response to the economic downturn resulting from the Covid-19 pandemic. More engineering construction work has been loaded into an already crowded market, with larger projects in greater numbers than ever. Even before transport infrastructure was deployed for this task, governments were failing to deal with the most pressing problems in infrastructure delivery: overly politicised project selection, a failure to learn from history and the continual reach for megaprojects as a first resort.
{"title":"Public infrastructure investment in the time of Covid","authors":"M. Terrill","doi":"10.22459/ag.28.01.2021.08","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.08","url":null,"abstract":"Transport infrastructure investment has been used as a crude tool in response to the economic downturn resulting from the Covid-19 pandemic. More engineering construction work has been loaded into an already crowded market, with larger projects in greater numbers than ever. Even before transport infrastructure was deployed for this task, governments were failing to deal with the most pressing problems in infrastructure delivery: overly politicised project selection, a failure to learn from history and the continual reach for megaprojects as a first resort.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45509147","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.10
Gene Tunny
{"title":"Long-run consequences of the pandemic debt","authors":"Gene Tunny","doi":"10.22459/ag.28.01.2021.10","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.10","url":null,"abstract":"","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":" ","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47173779","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-10DOI: 10.22459/ag.28.01.2021.09
P. Tulip
The Reserve Bank of Australia (RBA) recently placed higher priority on stabilising household debt than on its conventional goals of unemployment and inflation. This was bad economics, bad process and resulted in substantial unnecessary hardship. However, it was not unusual. The RBA has a record of poor decisions. That partly reflects poor process and a lack of expertise. More fundamentally, the RBA has a culture that places a low priority on getting the answers right. To address these problems, more monetary policy experts should be appointed to the RBA Board, and board members should be individually accountable for their votes. The RBA should be required to be more transparent-in particular, it needs to provide detailed explanations for its decisions and it needs to show alternative projections for interest rates. Decisions should be explained and defended at regular press conferences.
{"title":"Structural reform of the Reserve Bank of Australia","authors":"P. Tulip","doi":"10.22459/ag.28.01.2021.09","DOIUrl":"https://doi.org/10.22459/ag.28.01.2021.09","url":null,"abstract":"The Reserve Bank of Australia (RBA) recently placed higher priority on stabilising household debt than on its conventional goals of unemployment and inflation. This was bad economics, bad process and resulted in substantial unnecessary hardship. However, it was not unusual. The RBA has a record of poor decisions. That partly reflects poor process and a lack of expertise. More fundamentally, the RBA has a culture that places a low priority on getting the answers right. To address these problems, more monetary policy experts should be appointed to the RBA Board, and board members should be individually accountable for their votes. The RBA should be required to be more transparent-in particular, it needs to provide detailed explanations for its decisions and it needs to show alternative projections for interest rates. Decisions should be explained and defended at regular press conferences.","PeriodicalId":41700,"journal":{"name":"Agenda-A Journal of Policy Analysis and Reform","volume":"61 3","pages":""},"PeriodicalIF":0.1,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41310685","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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