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Macroeconomic Policy for Australia in the 1990s

Published online by Cambridge University Press:  01 January 2023

G.C. Harcourt
G.C. Harcourt*
Affiliation:
Jesus College, Cambridge
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Abstract

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The size of the deficit has little if any significance as an indicator of short-run macroeconomic policy. Government expenditure should be determined by longer term aspirations. Taxation (and other revenue measures) must be used, along with monetary policy, for short-term economic management, but whether revenue should be at a level that results in a deficit or not depends on many things including the composition of government expenditure and the state of the economy. At present, our economy requires a brake on total consumption expenditure and this may require a rise in taxation levels despite the high current level of unemployment. A high rate of capital accumulation is essential to change the structure of production and to increase output and productivity, but the brake on consumption must be eventually relaxed. Without an expectation of healthy consumption growth there will not be an ongoing high rate of accumulation in the private sector.

Type
Research Article
Information
The Economic and Labour Relations Review , Volume 4 , Issue 2 , December 1993 , pp. 167 - 175
Copyright
Copyright © The Author(s) 1993

Footnotes

*

I thank but in no way implicate Jonathan Michie, John Nevile, Peter Nolan, Claudio Sardoni, Rod Tyers, John Wells and an anonymous referee, for comments on a draft of this article. An earlier version was published in ALR, March 1993 but in such a mangled form as to be unreadable. I have therefore enlarged it for a journal which allows its authors to correct proofs and cares for the presentation (as well as the content) of their articles.

References

Harcourt, G.C. (1992) “Markets, Madness and a Middle Way”, Australian Quarterly, 64:1.CrossRefGoogle Scholar
Heilbroner, R. (1992) “The Deficit: A Way Out”, New York Review of Books, 39:19, November 19.Google Scholar
Salter, W.E.G. (1960) Productivity and Technical Change, CUP.Google Scholar