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Who said that? It's obviously not. Not really a matter of opinion.Lordsion said:others say expansionary ....
Economist Stephen Walters of JPMorgan, in a note to clients, gives the government credit for slowing spending in an effort to rein in inflation.michael1990 said:It is expansionary.
All the policies the government is implementing is not helping inflation but contributing to it.
Lol Michael.michael1990 said:It is expansionary.
All the policies the government is implementing is not helping inflation but contributing to it.
Gnrlies is correct.BackCountrySnow said:Lol Michael.
It's a 21.7 billion dollar surplus.
it's contractionary..
Even if it does not curb inflation for that matter, that doesn't mean it's expansionary
EDIT: after reading gnrlies post i'm kind of confused.
I thought a budget was expansionary if there is a deficit and contractionary if there is a surplus.
I didn't know it had anything to do with the Base year's budget because if there is a surplus (gov't spending>tax revenue) then it is a leakage from the circular flow which causes the economy to contract.
Yes, but there is no more public debt...if you believe what the Govt says and that the 'Future Fund' is completely covering for the debt. It is 100% Private Debtnick90 said:The 2008-09 Budget is definitely contractionary, since the surplus has increased as a proportion of real GDP (from about 1.5% of GDP to 1.8%). I believe that the question Lordsion might have intended to ask is " do you think the Budget will have a stimulatory effect on the economy or not?" Even though the fiscal stance is contractionary, the Budget could still have a stimulatory effect.
A lot of commentators think this Budget is more stimulatory than was needed (or at least does not do enough to dampen aggregate demand) given Australia's current high inflation climate. After all, the Budget still involved a 1.1% increase in real spending and there were significant tax cuts, particularly for low-income earners (who typically have a higher MPC). Also, there weren't any particularly hard-hitting spending cuts in many areas of significance. So I would probably lean towards saying it may have been better for inflation and interset rates if it had been a tougher Budget.
Over the past couple of decades, the first Budget for an incoming Government has typically contained much larger spending cuts. The Keating and Howard Governments both really wielded the axe in their first Budgets, in order to combat inflation, and in order to remove public sector debt contributing to the CAD, respectively (I think?, correct me if I'm wrong).