Institutions, individuals, and ideas: macroeconomic policy-making in Australia from Federation to 2020

Presented by ANU College of Asia & the Pacific and ANU College of Business & Economics

The ending of the global boom in primary commodity prices is leading to a significant macroeconomic rebalancing of the Australian economy. This is being implemented in a surprisingly effective manner, especially when compared with what is happening in Brazil and South Africa. In this lecture, Professor Vines will argue that such a relatively smooth process has been made possible by the strong set of macroeconomic policy-making institutions which have been developed in Australia over more than a century.

His lecture will have three parts. He will begin with a discussion of the great post World War II Reconstruction Project of the mid-to-late 1940s, led in Canberra by Prime Ministers John Curtin and Ben Chifley, the ‘Seven Dwarfs’, and their economist colleagues, including especially Lyndhurst Giblin, Leslie Melville and Trevor Swan. Together these people invented Australia’s strikingly original form of open-economy Keynesianism, and used it to replace the gold standard that had been in place since Federation. Vines will then analyse how the Hawke-Keating reforms of the 1980s overturned two further post-Federation legacies. Australia’s unique system of protectionism (‘protection for everybody’) gave way to the liberalising influences of the Productivity Commission, and the Australian system of centralised wage-fixing (‘fair wages for everybody’) was replaced by inflation-targeting, administered by the Reserve Bank and by enterprise bargaining. Third, Vines will describe the important reforms, undertaken over the past 30 years, which have greatly liberalised the Australian financial system, as compared with what was in place a hundred years ago; he will analyse the rather skillful way in which the Reserve Bank has dealt with the macroeconomic implications of these reforms.

In his lecture, Professor Vines will focus not just on the policy-making institutions, but on the ideas which underpinned them, and on the extraordinarily inventive individuals who developed these ideas.

David Vines is a Professor of Economics, and a Fellow of Balliol College, at Oxford University, where he is also Acting Director of the Political Economy of Financial Markets Programme at St Anthony’s College and Director of the Ethics and Economics Programme at the Institute for New Economic Thinking in the Oxford Martin School. In addition he is a Research Fellow of the Centre for Economic Policy Research in London.

David’s research is on macroeconomics, finance, and global economic governance; he has published many papers and books on these subjects. His initial work was with the Nobel-Prize winner James Meade in Cambridge; together they published some of the earliest research on inflation-targeting regimes. He is currently working on the restoration of trust in the financial system, on the future of the European Monetary Union, and on the role of the International Monetary Fund in ensuring international macroeconomic cooperation. He teaches macroeconomics, international economics and development economics to both graduate students and undergraduates at Oxford University.