Macro Economics Articles Updated

Relative to GDP Australian government spending to address COVID-19 has been among the highest in the world. The Morrison government seems pleased to have been a world leader in mortgaging the future to combat the crisis. Its package, totalling $320 billion, comprises five elements: • The PM’s initially anno

Writing in The Australian, Janet Albrechtsen has pointed out that the statistical value of life used in regulatory assessment is $4.9 million for someone expected to live another 40 years — $213,000 per year Such measures are income-dependent; in the US the value was put at $9 million and a 2012 study for 

 I have a piece in Quadrant where I estimate the person-years lives saved in Australia at 80,000. Each person-year is worth, on the government’s data, $219,000, hence saving is quantified at $17 billion. The cost in outlays and lost production I estimate at $235 billion, fourteen fold the benefits in lives saved. If

The $320 billion in costs the Australian government has incurred to sustain and stimulate the economy in light of the COVID-19 crisis is money spent for consumption without it attracting any corresponding production. It is a permanent loss that can only be retrieved by increased production. Two areas where r

When the Prime Minister and Treasurer appointed Stephen Kennedy as the Treasury Secretary, they opted for a bureaucrat who had been the architect of Turnbull’s potentially disastrous carbon tax. They would also have known him to have been a senior adviser on Kevin Rudd

It started with Mirko Bagaric in The Australian — “Release super to boost economy” — who, while justifiably railing against the superannuation funds’ fees, argued that allowing people to access 10 per cent of their super could inject up to $300 million into the economy. Mirko has separately suggested that the ac

In normal times we have a healthy disdain for the insights and capabilities of our political leaders. In Australia, the commentariat has just emerged from agendas that blamed them for not acting fast enough to combat the bushfire crisis — even having contributed to it — and from looting taxpayer funds to cur

Deaths from coronavirus were up yesterday (March 16) on the previous day. Although death rates lower than one per cent are being quoted, the macro data (deaths/deaths-plus-recoveries) is 8 per cent, and 15 per cent in Australia (see the chart below). Hopefully that will improve. Otherwise, if Angela Merkel is cor

Keynesian policy lever pullers at the RBA and Treasury, as well as the Opposition, have been urging the government to inflate the economy. Some are calling for deficit spending, others are urging tbhe authorities to force interest rates even lower than the current barely positive levels.  Even if ignorant of the imp

Keynesian policy lever pullers at the RBA and Treasury, as well as the Opposition, have been urging the government to inflate the economy. Some are calling for deficit spending, others are urging tbhe authorities to force interest rates even lower than the current barely positive levels. Even if ignorant of the impos

One disturbing factor regarding the Australian economy is its sluggish growth.  Per capita growth was negative in 2018/9 and has not had a sustained run above 2 per cent since the pre-2007 Howard/Costello years.  The key drivers of growth are capital investment (with its associated technological gains) and

Nick Cater in The Australian rightly lampoons a Harvard study that, by placing its focus on manufacturing, manages to rank Australia ninety-third in the world economic complexity league table. By contrast, another study, Credit Suisse’s Global Wealth Report, puts Australians second in the world in terms of​

The Australian economy has been flagging for many years now.  Over the past year we actually saw a decline in GDP per capita and per hour worked.There are many reasons for this but all come back to government intervention – excess spending on unproductive welfare measures, over-taxation of business inc

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The Productivity Commission’s latest bulletin shows labour productivity annual growth has fallen over recent years, from an average of around 2.5 per cent since 1975/6 down to a negligible increase in 2017/8. Capital growth was also lower and the contribution to output from capital deepening was actually nega

The different rates of change in world income levels have provided Australia with a magnificent base on which to build our own prosperity. But, though our standard of living is testament to some success, political measures have blunted the potential level of achievement.

The Australian economy has been flagging for many years now.  Over the past year we actually saw a decline in GDP per capita and per hour worked.

There are many reasons for this but all come back to government intervention – excess spending on unproductive welfare measures, over-taxation of busi

Although the economic cycle points to a downturn in the US, growth and especially the stock market is surging.  A newborn confidence is evident and the tax reforms are augmenting investment and hence economic health. That growth in investment was already evident prior to the passage of the tax reforms.

In Korea earlier this month, President Trump contrasted North and South Korea which in 1950 had similar levels of income per head. Today South Koreans, having embraced free markets based on low taxes and secure property rights, earn 40 times more than their northern counterparts.

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

IN this week’s federal Budget, the Coalition implemented policies established in the Rudd/Gillard years. The expansions in health, education and welfare budgets — now comprising two thirds of spending — were confirmed. Over the next four years, annual spending will increase by $50 billion to $340 billion — a levy on the average non-government worker of more than $30,000 a year.

Australians are now worse off than they were a couple of years ago. Our export prices have weakened so that we now need to raise export quantities by one third to pay for our imports. That alone has wiped six per cent off our real income. In addition, private investment has peaked,

LAST week saw the completion of the National Reform Summit. This brought together a kaleidoscope of speakers from politics, business, unions and non-government lobby groups. Participants agreed that we need greater productivity to enable higher living standards. The contention was on how to achieve this. Unions and social groups

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

CLOWNS is what the Treasurer called those doubting the Australian economy’s strength. This followed the release of national income data covering the first quarter of 2015. Even though the economy’s growth rate was a lacklustre 2-3 per cent, 

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

Following the Prime Minister’s expectantly close-to-death experience, the government has been expending greater energy on policy announcements.  Not all of these have been sensible — think the proposal to tax foreign home-buyers and the half proposal to restore subsidies

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

Catallaxy File articles may be available by searching on Trove archive - National Library Australia

The government is kite flying a one-off income tax surcharge for the budget, perhaps to be deceptively called a deficit levy, to side-step the "no new taxes" pledge. Commonwealth expenditure has blown out as a result of long-term commitments made under Rudd and Gillard. As a share of GDP, it grew from 23 per cent in 2007/8 to 26 per cent this year

Rejecting SPC Ardmona's application for $50 million in government "co-investment" support, Treasurer Joe Hockey announced "the age of entitlement is over, the age of personal responsibility has begun".

As well as establishing the Commission of Audit to ferret out savings, Joe Hockey has foreshadowed a sweeping inquiry to commence next year into Australia's financial system. Such reviews in the past have focused on how to get a more level playing field between different financial institutions and how to overcome regulatory distortions.

After six years of economic misery in the developed world everyone is desperate for growth to resume. Every sliver of good news is greeted as a hopeful sign, only to be dashed by other indicators offering contrasting evidence. For example, this week saw a welcome increase in US employment but this was followed by stories that France and Italy are shedding jobs and seeing their economies shrinking further.

Tony Abbott is fleshing out his policies for government. Hard on the heels of repealing the carbon tax and mining taxes, he has nominated spending cuts and reductions in regulation as priorities. Australia is over-regulated and over-taxed. And once regulations and spending programs are established they are difficult to cut. That's because once in place they spawn interest groups that benefit from them.

Trade Minister Craig Emerson has listed 13 reasons on why he is optimistic about Australia's growth prospects. Among these is an improvement in national savings and increased investment. As has always been the case, investment is the key to growth in gross domestic product. And savings are the prerequisite for investment.

On this day in 1781 the British army in North America surrendered to George Washington at Yorktown. Six years later an independent United States adopted the world's first modern constitution, on which Australia's 1901 Constitution was modelled.

Next month will see the release of state and federal budgets with both focusing on lower deficits. The Commonwealth's spending cuts will include reducing excessive staffing levels. But its main action will involve tax increases masquerading as spending cuts on items like fuels used in mining.

Ted Baillieu plans to shave 3600 jobs from Victoria's bloated public service. The state of Wisconsin in the US, with a population similar to Victoria, is the battleground for rolling back excessive public service spending.

A recent AcilTasman report shows Australia's productivity performance has slowed, with Victoria, post-2005, collecting the wooden spoon. One cause of this in Victoria is increased regulation, including requiring higher spending on expensive renewable energy.

The global financial crisis left vast holes in the world's major advanced economies. The US, Japan and European Union all ended 2009 with their national income levels 2.5 to 5.5 per cent lower than in 2007. For the first time in more than a year, the recent September quarter saw the world's major economies record positive growth.

National governments protect their citizens' interests in many ways. They negotiate trade deals to get better overseas market access, raise loans at the best interest rate and aggressively promote their countries' merits as tourist destinations. This same pursuit of citizens' interests is equally evident within federal systems like Australia's.