How potent is fiscal policy in Australia?

Makin, Anthony J. and Narayan, Paresh Kumar 2011, How potent is fiscal policy in Australia?, Economic papers, vol. 30, no. 3, pp. 377-385, doi: 10.1111/j.1759-3441.2011.00120.x.

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Title How potent is fiscal policy in Australia?
Author(s) Makin, Anthony J.
Narayan, Paresh KumarORCID iD for Narayan, Paresh Kumar
Journal name Economic papers
Volume number 30
Issue number 3
Start page 377
End page 385
Total pages 9
Publisher Wiley - Blackwell
Place of publication Richmond, Vic.
Publication date 2011-09
ISSN 0812-0439
Keyword(s) Australia
fiscal policy
offset coefficient
private saving
public saving
Summary This article examines the efficacy of fiscal policy in Australia, focusing on the relationship between changes in the economy’s consolidated fiscal imbalance and private sector saving over recent decades. We first examine the macroeconomic significance of the offset coefficient between public and private savings, whose size effectively determines the effectiveness of fiscal activism. The approach innovatively suggests that these estimates simultaneously reflect Ricardian and other non-Keynesian explanations of private consumption, such as the lifecycle and permanent income theories. Econometric estimation of the offset coefficient for Australia over the period 1980–2008 yields values between 0.75 and near unity, which imply a small or near-zero fiscal multiplier, and that running budget surpluses to lift national saving is ineffective.
Language eng
DOI 10.1111/j.1759-3441.2011.00120.x
Field of Research 150202 Financial Econometrics
Socio Economic Objective 910105 Fiscal Policy
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2011, The Economic Society of Australia
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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