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by bhb916
5144 days ago
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I believe you're misrepresenting the Australian situation. While it is true they experienced less of a slowdown that other nations, it's not entirely clear that the stimulus had anything to do with it. A few points: (1) The data (when compared to the recession forecast) doesn't support the idea that household spending is what boosted the economy. Instead, business investment and exports appeared to prop up the Australian economy. (2) The Rudd government didn't try anything (broad stimulus, cash payments, home rebates, auto stimulus) that wasn't tried in the United States. If you believe these things succeeded in AUS, you'd have to have a convincing argument as to why they didn't in the US. Obviously this is a tough nut to crack and there are really too many sourced to cite. Here is an article that talks a little bit about the data: http://www.theaustralian.com.au/business/opinion/how-mining-... |
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NO doubt the Rudd government's big budget stimulus helped keep Australia out of recession last year. But mining was at least as important in producing the unexpectedly good performance.
I agree 100% with that conclusion.
Also, at odds to your point (1) above the same article says:
So the stimulus cash handouts and capital works look to have done most of the work by pumping up consumer and government spending. Treasury suggests budget stimulus added 2 percentage points to GDP growth last year.
It goes on to point out that this was insufficient in itself to explain the growth in the economy.
Clearly, demand stimulus by government hand-outs isn't a sustainable, long term model to grow an economy. BUT contra-cycle government spending can be an important tool to stimulate growth, especially through periods of uncertainty. (To make it clear this isn't a political point: Australia was able to do this because of large surplus budgets run in the period up to 2008/09 by the previous government. That was good policy during that period, and the stimulus was good policy during the crisis).
Note that in the US the stimulus package was radically smaller (compared to the size of the US economy) vs the Australian package. Additionally, it actually did reduce unemployment[1]. It is unfortunate that the US didn't follow that up, and instead made things worse via austerity measures.
[1] http://www.cbo.gov/publication/42715