A Keynesian Budget (reprint from Crikey coverage)

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For an economist, the most striking feature of the 2009-10 Budget is the reappearance of old-time Keynesianism, after more than three decades in which fiscal policy took a back seat and monetary policy was primarily based on inflation targeting. The rhetorical change from the ‘recession we had to have’, when ‘pump-priming’ was a dirty word, is striking.

And while the response to the 1989-91 recession eventually included a significant dose of fiscal stimulus, ‘eventually’ is the operative word. In 1989 the government and the Reserve Bank kept squeezing the economy long after everyone else could hear bones breaking. This time around, the first round of stimulus money was going into bank accounts before the contraction (as measured by quarters of negative GDP growth) had even begun.
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Out of the lockup

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I’m back on deck, sort of, after the Budget lockup in Canberra on Tuesday. The event was quite an experience, though maybe not one I’d choose to do every year. It started with a scrum in one of the big halls in Parliament House where the assembled journos +me gathered to await our chance to look at the Budget paper. Then we were sorted into committee rooms, some equipped with elaborate preinstalled computer networks (AAP for example) and some with one power cord for two computers (Crikey!).

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Benefits of blogging

Brad DeLong links to my post on the obsolescence of New Keynesian macro, and concludes

I have to call this one for Krugman, Clark, Akerlof, Shiller, and Quiggin and against Blanchard’s vision of growing knowledge and analytical convergence

I’ve been reasonably successful as Australian academic economists go, but, based on my journal contributions, I would have rated the likelihood of reading the phrase “Krugman, Clark, Akerlof, Shiller, and Quiggin” only marginally higher than that of being romantically linked with Angelina Jolie. Blogging really does have its rewards.

Lockup

I’ll be incommunicado for much of Tuesday, as I’m going to be representing Crikey at the Budget lockup. This is very different from my usual Budget experience, where I spend a day or so digesting the budget and the immediate reactions, before aiming for a more considered analysis. This time, I’ll be doing the immediate reactions. Quite a challenge for me, and an interesting sign of the way in which media are evolving.