Fiscal Consolidation and Australia's Public Debt
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Description
Australia has experienced one of the fastest growing public debt levels in the world post-Global Financial Crisis due to a series of large federal budget deficits driven by high government spending. In this paper we examine the balance sheet implications of this escalating public debt, before proposing some macro-fiscal objectives for determining its sustainable level. These objectives are to (i) restore the federal government's solvency; (ii) eliminate foreign public debt; and (iii) achieve budgetary balance over the business cycle. Empirically, we first examine how much fiscal consolidation is required for debt stabilisation at current levels, before considering what sized budget balances are needed to achieve the target debt to GDP ratios consistent with the proposed objectives. The results show that no target debt to GDP level consistent with the optimal levels will be met on current fiscal settings in the medium term. This implies significantly greater fiscal consolidation is required to minimise future fiscal risk.
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ID Code: | 151398 |
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Item Type: | Contribution to Journal (Journal Article) |
Refereed: | Yes |
Measurements or Duration: | 17 pages |
Keywords: | Australia's public debt, fiscal consolidation |
DOI: | 10.1111/1467-8500.12214 |
ISSN: | 0313-6647 |
Pure ID: | 44101231 |
Divisions: | Past > QUT Faculties & Divisions > QUT Business School Current > Schools > School of Economics & Finance |
Copyright Owner: | 2016 Institute of Public Administration Australia |
Copyright Statement: | This work is covered by copyright. Unless the document is being made available under a Creative Commons Licence, you must assume that re-use is limited to personal use and that permission from the copyright owner must be obtained for all other uses. If the document is available under a Creative Commons License (or other specified license) then refer to the Licence for details of permitted re-use. It is a condition of access that users recognise and abide by the legal requirements associated with these rights. If you believe that this work infringes copyright please provide details by email to qut.copyright@qut.edu.au |
Deposited On: | 07 Feb 2020 06:39 |
Last Modified: | 03 Mar 2024 11:28 |
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