28 Jun, 2011 Australia and the Great Recession
By Chris Barrett
Few people with an interest in economics will soon forget the extraordinary events of the global financial crisis (GFC) and what is often termed the â€œGreat Recessionâ€ of 2008/09. These were events Chris Barrett experienced professionally as chief of staff to Treasurer Wayne Swan between late 2007 and 2010.
Australia, famously, was virtually alone among International Monetary Fund (IMF) advanced economies in not experiencing a recession during this period, and had the strongest growth of any of these economies in 2009.
This performance merits examination for what it can tell us about the contribution policy decisions made to this outperformance. Chris has looked at the most extensively debated of those policy interventions: the fiscal stimulus packages announced in October 2008 and February 2009. It is timely to look back on the latest data and analysis to draw some conclusions about the impact of fiscal stimulus during this period, and ask two questions: (1) did fiscal stimulus prevent an Australian recession, and if so, (2) why did it do so in Australia when it didn’t in other countries?