Ric Battelino, Deputy Governor of the Reserve Bank, gave an interesting speech today to the Moreton Bay Regional Council in Queensland.
It’s titled “Twenty Years of Economic Growth”, and is a fairly dry discussion of the causes and dimensions of Australia’s strong economic performance over the past twenty years.
Where it gets interesting, in the context of the debate about the efficacy of the Government’s fiscal stimulus, is his discussion of current conditions.
The Deputy Governor said:
As you know, the Australian economy recovered relatively quickly from the slowdown that followed the global financial crisis. It is currently growing at around its trend rate, in part due to a large increase in government spending.
Now, that cannot be construed as a big tick for the Government’s stimulus packages, and I don’t seek to present it as such. Still, it’s a fairly unambiguous acknowledgement that our recovery can, at least in part, be attributed to the large increase in government spending. The more extreme anti-Keynesians would have us believe that this can’t happen.