We are all aware about the mining boom going on in WA and QLD, and the other states trapped in the slow lane of the 2 speed economy, patiently waiting for the supposed income flows from the mining boom to come. The RBA seems to always be optimistic that the boom will stay strong and the income and prosperity will spread to the other states eventually. The government has attempted to help out with the Minerals Resources Rent Tax. Theoretically economic flows can be felt widespread under normal circumstances however the effect of the Global Financial Crisis plays a major role in why we have a 2 speed economy and how it is constraining the flows from the mining boom to the rest of the economy.
As the years go by and new countries find themselves greatly affected by the crisis, a handful of them emerge as having resisted the extreme shock of global financial instability.
Here’s a list of economies whose financial system prevailed during the crisis
In my Review of the Economics Society’s Budget Night I mentioned that Professor Neville Norman controversially called for the Reserve Bank’s monetary policy role to be put on hold and the cash rate to be fixed. Such a statement cannot be left without further investigation, and therefore I have interviewed Professor Norman to find out exactly what his reasoning is.
First though, we need to look at what the RBA is trying to achieve by reviewing and adjusting the cash rate on a monthly basis. The aim is to analyse macroeconomic data and use this information to stabilise the business cycle (reduce swings in economic activity in the Australian economy).
I am sure you have heard of the commotion unfolding in Europe, dubbed by many news media outlets as the ‘European sovereign debt crisis’. But what does this all mean? Ric Battelino, Deputy Governor of the Reserve Bank of Australia, spoke in Sydney about the ‘European Financial Developments’ and what it means for the world …