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Macroeconomic Policy ?

Inflation. unemployment and growth or a decade or more, macroeconomic policy in Australia seems to have been
directed primarily at controlling inflation in the belief that success in achieving
this target would be associated with macroeconomic stability and growth.
Following the Global Financial Crisis the main emphasis of macroeconomic
policy has been on trying to avoid a recession. Contrast these two phases of
policy and explain how macroeconomic policy objectives, targets and
instruments have differed.
In order to complete this task you should:
1. Outline the experience of the Australian economy over the last 10-15
years, making use of major macroeconomic aggregates – these may be
presented in summary tables and/or graphs. Stress should be placed on
the challenges facing policy makers at present and likely challenges in
2. Discuss the concept of `instruments and targets’ in macroeconomic
policy and assess how this concept might be applied to the current policy
framework in Australia.
3. Show how the economic theory you have learnt can be used to explain
current macroeconomic policy
Some references to get you started –
Garnett, A. and Lewis, P., ‘The Economy’, in Aulich, C. and Wettenhall R.
(eds), Howard’s Fourth Term, New South Wales University Press, Sydney.
Otto, G. (2007) `Central Bank Operating Procedures: How the RBA Achieves Its
Target for the Cash Rate’, Australian Economic Review; June, Vol. 40 Issue 2,
Gordon, C. and Valentine, T. (2009), Economics in Focus: The Global Financial
Crisis, Pearson Education, NSW.


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