Assessing Australian Monetary Policy in the <scp>Twenty‐First</scp> Century*

Gross, Isaac; Leigh, Andrew

doi:10.1111/1475-4932.12689

Cited by 4 publications

(5 citation statements)

References 22 publications

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“…… An otherwise manageable downturn could be turned into something more serious. (Lowe 2017b) Some commentators have suggested that its concern about house prices led the RBA to keep monetary policy tighter than justified by other economic conditions, resulting in higher unemployment (Gross and Leigh 2022;Tulip 2022). Despite stating that it did not target debt or house price ratios (Lowe 2017b), the RBA in other comments suggested that both factors were influencing monetary policy:…”

Section: The Australian Governmentmentioning

confidence: 99%

Towards an Australian Housing and Homelessness Strategy: understanding national approaches in contemporary policy

Martin¹,

Lawson²,

Milligan³

et al. 2023

AHURI Final Report

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AHURIAHURI is a national independent research network with an expert not-for-profit research management company, AHURI Limited, at its centre. AHURI's mission is to deliver high quality research that influences policy development and practice change to improve the housing and urban environments of all Australians.Using high quality, independent evidence and through active, managed engagement, AHURI works to inform the policies and practices of governments and the housing and urban development industries, and stimulate debate in the broader Australian community. AHURI undertakes evidence-based policy development on a range of priority policy topics that are of interest to our audience groups, including housing and labour markets, urban growth and renewal, planning and infrastructure development, housing supply and affordability, homelessness, economic productivity, and social cohesion and wellbeing. AHURI Limited also gratefully acknowledges the contributions, both financial and in-kind, of its university research partners who have helped make the completion of this material possible.The research team gratefully acknowledges the contributions of all our Australian and international interviewees, and the participants in our expert workshop, as well as Xin Xia and Alessandra Buxton (City Futures Research Centre) for their administrative support. DisclaimerThe opinions in this report reflect the views of the authors and do not necessarily reflect those of AHURI Limited, its Board, its funding organisations or Inquiry Panel members. No responsibility is accepted by AHURI Limited, its Board or funders for the accuracy or omission of any statement, opinion, advice or information in this publication. AHURI journalAHURI Final Report journal series is a refereed series presenting the results of original research to a diverse readership of policy makers, researchers and practitioners. Peer review statementAn objective assessment of reports published in the AHURI journal series by carefully selected experts in the field ensures that material published is of the highest quality. The AHURI journal series employs a double-blind peer review of the full report, where anonymity is strictly observed between authors and referees.

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Section: The Australian Governmentmentioning

confidence: 99%

Towards an Australian Housing and Homelessness Strategy: understanding national approaches in contemporary policy

Martin¹,

Lawson²,

Milligan³

et al. 2023

AHURI Final Report

View full text Add to dashboard Cite

show abstract

“…During the period from 2013 to 2019, there was some public discussion from time to time of the RBA being inhibited in lowering interest rates, not because it thought that unemployment was below the NAIRU but because it was concerned about the systemic risks associated with high levels of borrowing for housing and the associated housing asset boom. Gross and Leigh pick up this point in relation to their discussion of the period between 2016 and 2019: ‘the RBA was concerned about financial stability and accordingly set interest rates higher than inflation and unemployment alone would warrant’ (Gross and Leigh 2022, p. 281). They are very critical of such a policy stance.…”

Section: The Second Way In Which Things Have Gone Wrong For the Rba: ...mentioning

confidence: 99%

“…In a careful study, Isaac Gross and Andrew Leigh, using the RBA's MARTIN model, find that the interest rate was kept too high during the period from 2016 to 2019, so that during that time inflation fell below the RBA's target band (Gross and Leigh 2022). The authors did this by comparing actual monetary policy decisions to a counterfactual in which the interest rate was set according to an optimal simple rule.…”

Section: The Rba's Mistakes About the Nairumentioning

confidence: 99%

“…They suggest that optimal monetary policy in that period would have required a substantially lower interest rate and would have led to significantly better employment outcomes. ‘The failure to implement optimal monetary policy cost the equivalent of approximately 270,000 people being out of work for a year’ (Gross and Leigh 2022, p. 281). Gross and Leigh confine their analysis to 2016–19, but the phenomenon of unnecessary unemployment was also present at least over the several immediately preceding years.…”

Section: The First Way In Which Things Have Gone Wrong For the Rba: R...mentioning

confidence: 99%

“…They say that, on this point, the literature is remarkably clear cut. ‘A strategy of using monetary policy to constrain asset price growth, dubbed leaning against the wind, has been found generally to fail any reasonable cost benefit test’ (Gross and Leigh 2022, p. 283).…”

Section: The Second Way In Which Things Have Gone Wrong For the Rba: ...mentioning

confidence: 99%

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Monetary Policy Mistakes and Remedies: An Assessment Following the RBA Review

Garnaut,

Vines

2023

Australian Economic Review

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This article responds to the Review of the Reserve Bank of Australia (RBA), which was released on 20 April 2023. We describe the underperformance of the Australian economy over the past decade, and identify the contribution of RBA mistakes. We suggest remedies that would improve prospects for low inflation and unemployment. Returning to general prosperity requires better coordination of monetary, fiscal and macro‐prudential policy and of these with other aspects of economic policy‐making. We conclude that while the RBA Review makes some valuable suggestions about structure and process at the RBA, it provides little guidance on the content of policy.

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E: Policy, Law and Regulation

2022

World Banking Abstracts

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The study examines the effect of foreign aid on the relationship between country governance and corporate investment (CI) choices. Using 10 years of financial data (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016) on non-financial sector firms from seven economies that are major recipients of foreign aid, results show that both country governance and foreign aid have positive effects on CI decisions. However, results show negative effects of foreign aid on country's governance conditions, which further results in negative CI, indicating that the dependency of a country on foreign aid undermines its institutional performance and efficiency, which further deteriorates CI. The study suggests that policymakers from these economies should ensure the effectiveness of foreign aid and introduce better governance practices to expediate industrial growth. (1 figure, 7 tables, references) 1078/39 Firms' response to macroeconomic estimation errors Binz, O. et al.

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Assessing Australian Monetary Policy in the Twenty‐First Century*

Cited by 4 publications

References 22 publications

Towards an Australian Housing and Homelessness Strategy: understanding national approaches in contemporary policy

Towards an Australian Housing and Homelessness Strategy: understanding national approaches in contemporary policy

Monetary Policy Mistakes and Remedies: An Assessment Following the RBA Review

E: Policy, Law and Regulation

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