Australia and the GFC: Saved by Astute Fiscal Policy?

Nicolaas Groenewold
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Nicolaas Groenewold: Business School, University of Western Australia

No 12-28, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Both before and after the federal election campaign in 2010, Australians were frequently told that they were spared the worst effects of the Global Financial Crisis because of the government’s timely and decisive fiscal stimulus. However, there are at least two other possibilities: monetary policy and foreign demand. This paper assesses the relative importance of these possibilities in driving output in the past few years. It does this within the framework of a structural vector-autoregressive model based on recent literature measuring the effects of fiscal and/or monetary policy on output. The results suggest that the government’s claims are considerably exaggerated.

Pages: 62 pages
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:12-28

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