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Document Type

Discussion Paper

Publication Details

Doug McTaggart and Tony Hall (1993) Unemployment: Macroeconomic Causes and Solutions? Or Are Inflation and the Current Account Constraints on Growth?

Prepared for the Conference on Unemployment: Causes, Costs and Solutions, Canberra 16-17 February 1993, organised by the Centre for Economic Policy Research, Australian National University.

School of Business Discussion Paper ; No. 39, Feb. 1993

© Copyright Doug McTaggart, Tony Hall and the School of Business, Bond University



As Australia emerges from recession in 1993, the impression one gets from the media, financial markets and some economists is that they are waiting expectantly for the government to tighten monetary policy once again to snuff out the incipient recovery lest growth in aggregate demand outstrips growth in aggregate supply. Should the latter occur either the current account will "worsen" or inflation will re-ignite, or both. Market expectations over the longer run apparently seriously consider the possibility that the government will have to recreate a recession in the near future if it adheres to its current policies of low inflation and reducing the level of international debt.

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