For fiscal policy Australian governments borrowed so heavily in the 1920s that

For fiscal policy australian governments borrowed so

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For fiscal policy, Australian governments borrowed so heavily in the 1920s that Australia was cut out of the London capital market when the economic outlook deteriorated in 1929. The contrast with recent times is stark. From the mid 1980s onwards, Federal Governments of both political persuasions have demonstrated the resolve needed to bring deficit budgets back into surplus after the economy has recovered from recession, and have committed themselves to increasingly well-articulated medium–term frameworks for fiscal policy. The discretionary fiscal policy actions in late 2008 and early 2009, which provided substantial and rapid
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What have we learnt? The Great Depression in Australia from the perspective of today 48 support to aggregate demand at a crucial time, were undertaken in the context of a medium–term fiscal framework that included an explicit, articulated strategy to return the budget to surplus once the economy returned to above–trend growth. 19 All these elements together (along with an improving external environment, strongly supported by expansionary monetary and fiscal policies in the rest of the world) have made possible a radically different outcome to the current global recession than would have been possible with the macroeconomic policy frameworks in place at the time of the Great Depression. These outcomes would surely be gratifying to those economists, including Colin Clark, who worked over the intervening decades to develop the economic and statistical tools to better our understanding of the macroeconomy and help prevent the devastation of another Great Depression. 19 I leave to another day a discussion of the reasons why discretionary fiscal policy fell out of favour in recent decades, but was embraced in response to the global financial crisis of 2008-09, and played a crucial role.
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What have we learnt? The Great Depression in Australia from the perspective of today 49 References Ahamed, L 2009, Lords of Finance: The bankers who broke the world , New York. Barnard, A 1987, ‘Government Finance’, Chapter 15 of Vamplew (1987), pp 254–285. Bernanke, B and James, H 1990, The gold standard, deflation and financial crisis in the Great Depression: An international comparison , Working Paper No. 3488, NBER. Butlin, M W and Boyce, P M 1985, ‘Monetary Policy in Depression and Recovery’, Australian National University Working Papers in Economic History , No. 44. Clark, C 1958, Australian Hopes and Fears , London, Hollis and Carter. Coleman, W, Cornish, S and Hagger, A 2006, Giblin’s Platoon: The trials and triumphs of the economist in Australian public life , ANU E Press. Copeland, D B 1934, Australia in the world crisis, 1929–33 , Cambridge University Press, London. Congressional Budget Office (CBO) 2009, The Long Term Budget Outlook , (Accessed October 2009).
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