That 70s Show

RBA Governor Glenn Stevens revisits the economics of the 1970s:

“There is much less inclination than there once was to use fiscal policy as a counter-cyclical stabilisation tool,” he told alumni of the Sydney University economics faculty last night.

Mr Stevens and his predecessor Ian Macfarlane have set little store by the use of the budget to influence inflation or rates.

Mr Stevens earlier this year said the budget should be judged for the value of the measures it contained and the sustainability of government finances.

“It shouldn’t be judged through the narrow prism of what might it mean for the overnight cash rate,” he said in January.

This does not stop the commentariat and Access Economics from living in a 1970s time-warp.

posted on 16 May 2008 by skirchner in Economics, Financial Markets

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