Greenspan on Australia
Australia features in Greenspan’s memoir, The Age of Turbulence:
Australia has always fascinated me as a microcosm of the United States in many ways. It is a land with vast open spaces, similar in many respects to the American West. I know I can’t generalise on the basis of a few years of observations, but I nonetheless found myself during my tenure at the Fed looking to Australia as the leading indicator of many aspects of US economic performance. I continually monitor Australia’s current account deficit, which has persisted far longer than that of the United States with no evident significant micro-economic impact other than large increasing foreign ownership of Australian corporate assets.
posted on 19 September 2007 by skirchner
in Economics, Financial Markets
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Interesting - a “leading indicator”? Maybe in 1989/90 when we went into a self-inflicted recession earlier than the US, but don’t our economic cycles normally lag the US?
Posted by .(JavaScript must be enabled to view this email address) on 09/19 at 10:47 AM
It’s a mixed lead-lag relationship. The long-run equilibrium relationship the RBA used to rely on implied that it was Australia that did the adjusting to any disequilibrium, but that relationship has broken down since 2001.
Posted by skirchner on 09/19 at 01:23 PM