Speech
What Has Australian Macroeconomic Thought Achieved in the Past Century – And Where Can it Contribute in the Next?
Andrew Hauser
*
Deputy Governor
Speech to mark the centenary of the Economics Society of Australia, Australian Conference of Economists
Sydney
–
9 July 2025
Audio
37.9MB
Q&A Transcript
Watch video: Speech by Andrew Hauser, Deputy Governor, to the Economics Society of Australia
Introduction
It is a great honour to address you on the 100th anniversary of the Economics Society of Australia. 1
It’s an honour because, over that past century, Australian thinkers have helped develop some of the
most important building blocks in open economy macroeconomics – the branch of economics that seeks
to understand how the global trading economy works.
Those were significant – sometimes world-leading – intellectual achievements.
But they were more than just that. Because they also shaped the policies and institutions that helped
Australia navigate the global economy of that period so successfully, delivering wealth and stability for
its citizens.
Indeed Australian macroeconomic research has pulled that trick off twice. First, powering the ideas that
lifted the country out of the Great Depression to flourish after the Second World War. And, second,
helping to design a reform program that rescued the country from the slump of the 1970s, and led to more
than a quarter century of recession-free growth.
Two Golden Ages, marshalling thought into action.
But to thrive in the next 100 years, Australia’s researchers will need to go for the hat-trick.
And that’s because the tectonic plates of the global economic system are once more in flux, as free
trade is rolled back; geopolitical alliances shift; climate change accelerates; and productivity growth
slows to a crawl in most developed countries.
Simply
coping
with such changes will take skill. Turning them to Australia’s
advantage
– identifying and exploiting new trading structures and sources of growth
– will require rich new thinking from Australian academia.
The
good news
is that many of today’s policy problems lie at the very heart of
Australia’s intellectual comparative advantage. The
challenge
is whether we can relearn
the lessons of the past – drawing in our best talent, strengthening the incentives for
policy-relevant research, and forging deep links between academics and policymakers.
In my remarks today I want to look back at some of those successes of the past century, before posing some
questions for the future.
What is
Australian
macroeconomic thought?
But before doing so, I should try to clarify what I mean by
Australian
macroeconomic thought.
Is it macroeconomic research
about
Australia?
By
Australians? Conducted
in
Australia? It could be any of the above. But if you wanted a ‘vibe’, in the
great Australian tradition of
The Castle
, I’d suggest three defining features: 2
First, an emphasis on small open economy macroeconomics, with a particular role for the commodities
and energy sectors. That reflects the nature of our economy and the challenges we face. But it also
has global application: our context is also our comparative advantage.
Second, a focus on solving practical real-world policy issues, rather than pushing forward more
abstract frontiers. Many influential Australian macroeconomists have also served as senior public
policymakers.
Third, a world-leading capacity to develop the analytical tools necessary to drive successful
economic policy – in particular small open economy quantitative macro-models and macroeconomic
data.
The past 100 years: Two ‘Golden Ages’ of Australian economic thinking 3
To illustrate how these themes played out over the past 100 years, I’m going to split the period
into two halves. The first lies either side of the Second World War; the second straddles the economic
reforms starting from the 1980s. Each in its own way can legitimately be called a Golden Age, in which
Australian ideas both advanced the global knowledge frontier and delivered prosperity for Australia.
The first Golden Age
The first period, from the birth of the ESA in the 1920s to the late 1960s, saw Australia pull itself out
of the depths of the Depression and navigate a world war.
Australia’s response to these challenges was shaped by its economic context as a small commodity
exporter. For much of the period, the growth model relied on expanding exports of raw materials
(primarily agricultural), using huge quantities of imported labour and capital. The central question in
such an economy was how to maintain both internal and external balance, in the face of external shocks.
To achieve these goals, the authorities relied primarily on centralised control. The exchange rate was
pegged to sterling; credit volumes and interest rates were typically administratively set, and
wage-setting was heavily institutionalised. 4
Tariffs were used actively, in an attempt to protect and
foster domestic industry, lift employment and reduce the economy’s reliance on volatile global
commodity markets. 5
Many great Australian thinkers helped shape this first Golden Age – but today I will focus on just
two.
The first is Lyndhurst Giblin.
Giblin was a model Accidental Economist. He devoted his first 45 years to everything
but
the subject: he was part of the Klondike gold rush, served as a Tasmanian MP and received the Military
Cross for gallantry on the Western Front. 6
Yet little more than a decade after the First World War,
Giblin had developed one of the most important building-blocks of macroeconomics.
As Government Statistician for Tasmania and later Ritchie Professor of Economics at the University of
Melbourne, Giblin had a ringside seat for the Great Depression – which in Australia began in 1928
as commodity prices fell, accelerating in 1929 with the global slump. Giblin saw that sharp declines in
world prices for agricultural produce – Australia’s main export – would not only lower
Australian farmers’ incomes, but would also cause them to spend less. And that in turn would lower
incomes for others, causing a slump to ripple out through the wider economy. That rippling could be far
larger than the first-round impact alone, amplifying the domestic repercussions of a global shock.
Giblin set out this startlingly simple but revolutionary idea – the modern-day multiplier in all but
name – in a 1930 lecture. That’s a year before Richard Kahn’s seminal
Economic
Journal
paper, and six years before Keynes’
General Theory
. What is today
known universally as the ‘Keynesian multiplier’ could and perhaps should be called the
‘Giblin-Keynes multiplier’. Yet neither Kahn nor Keynes made any reference to Giblin’s
work, or even appeared aware of its existence. 7
Giblin, however, was far less interested in global acclaim than he was in working out how Australia could
rescue itself from the Depression – and that was a hotly contested question. The then Premier of
New South Wales, Jack Lang, had a simple answer: default on state and Commonwealth debt to the United
Kingdom and use the savings to stimulate domestic activity. But default risked destroying
Australia’s future borrowing capacity, rendering its economic model unworkable. 8
The Bank of England, in the form of the widely disliked Otto Niemeyer, had a different proposal: cut wages
and balance the budget. Based partly on his multiplier analysis, Giblin worried that approach would be
too deflationary. With Douglas Copland, Leslie Melville 9
and others, he helped prepare the 1931
‘Premiers Plan’, which argued that Australia should accompany lower wages and a balanced budget
with monetary easing to ‘spread the loss’. A sharp devaluation against the British pound,
executed the same year, provided further support to external competitiveness. Giblin framed the challenge
as tackling an ‘outside problem which is causing an inside problem’ 10
– concepts that years later would be formalised as external and internal balance.
Although Giblin used what would come to be thought of as a ‘Keynesian’ analytical tool (the
multiplier), his policy prescriptions were decidedly
un
-Keynesian: this was no
debt-financed fiscal expansion. Writing in the
Melbourne Herald
in 1932, Keynes himself
recognised the plan ‘saved the economic structure of Australia’. But he advised against its
wider use, arguing that competitive devaluation or wage deflation would leave no-one better off, and
advocating ‘public works’ rather than ‘further pressure on money wages or a further
forcing of exports’. 11
Giblin’s thinking evolved in the same direction over time, and by the end of the Second World War he
favoured using government spending to stabilise the economy and keep unemployment low. That view informed
Australia’s position at the Bretton Woods conference, where it argued that relaxing trade
protections – a key goal of the United States – without also committing to full employment
could leave countries like Australia badly exposed to external shocks. 12
And it formed the core of the 1945
Full Employment
White Paper, developed by Giblin alongside Melville and
‘Nugget’ Coombs – later the first Governor of the RBA 13
– which set the basis for
policy in much of the post-war period.
My second case study is Trevor Swan – regarded by many as Australia’s greatest economist.
Swan made not one but two key contributions. The first is summarised in the ‘Swan diagram’, and
extended in the ‘Salter-Swan’ model developed with fellow Australian Wilfred Salter. The model
is designed to help think about policy coordination and trade-offs in a small economy like Australia,
with trade and a fixed exchange rate. The model elegantly demonstrated many of the issues the country
faced in the first Golden Age trying to achieve both internal and external balance. And it illustrated
how different combinations of macroeconomic tools – including fiscal, wage, exchange rate and trade
policy – might be used to maintain both in the face of international shocks.
Swan’s second seminal contribution was aimed at thinking through how to foster longer term economic
growth. Swan showed that medium-term growth in real per capita labour income depends on the rate of
technical progress, growth in the labour supply, and growth in the capital stock. This was a crucial
insight for Australia, which relied heavily on high rates of immigration. Swan’s framework showed
that, in such circumstances, sustained growth in real incomes also required rapid growth in productive
capital and technical progress. Without that, real incomes would stagnate or fall. Important messages for
policymakers at the time – and still relevant today.
Swan’s personal story is fascinating. Amongst other things, he was a perfectionist, and that –
combined with his preference for supporting
Australian
economics – led him to publish
his work slowly (if at all), and exclusively in local journals. As a consequence, much of the credit for
his pioneering ideas on growth, including a Nobel prize, went to Robert Solow rather than Swan. 14
But
like Giblin, Australia mattered more to him than global fame. Alongside his role as ANU’s first
Professor of Economics, Swan was Chief Economist to the Prime Minister’s Department (in the 1950s)
and a member of the RBA Board (from
1975–1985
). 15
The second Golden Age
The second Golden Age – from ideas to action – straddles either side of the deep economic
reforms of the 1980s and 1990s.
The reforms overturned the paradigm of the first Golden Age. The exchange rate was floated. High tariffs
were replaced with much freer trading arrangements. Constraints on the financial sector were released;
and, in time, the central bank was made independent and asked to hit an inflation target. Of course,
there was good luck too, as huge new export markets opened up in Asia. But taken together, these changes
ushered in an extended period of prosperity for Australia. 16
The intellectual groundwork for the reforms was laid years earlier, as recognition dawned that frameworks
of centralised control and protectionism were undermining, rather than protecting, competitiveness,
productivity growth and living standards. 17
This was far from unique to Australia, of course. But
Australian thinkers again made important contributions to the evolving global consensus – perhaps
most notably on the case against trade protection, through the work of Max Corden. Corden showed that the
economic costs of tariffs were much larger than previously recognised, once general equilibrium effects
were accounted for. His work, including the concept of ‘net effective rates of protection’,
which captured the impact of tariffs on imported inputs as well as outputs, remains widely cited –
and, sadly, is highly topical again today. 18
Like his earlier compatriots, Corden did not just push forward academic thinking – he also rolled up
his sleeves and got stuck into policymaking for Australia. His work had a profound impact on the
enquiries led by John Crawford over the 1960s and 1970s calling for a rationalisation of tariffs. 19
And it
led, through the advocacy of Fred Gruen, to the Whitlam government’s across-the-board
25 per cent cuts in tariffs in 1973, which began the long and winding road to free trade. 20
The
Tariff Board was renamed the Industries Assistance Commission – and two decades later became the
Productivity Commission: quite a journey! 21
The reforms of the Second Golden Age reflected a dawning recognition that – subject to safeguards
– flexible market prices could facilitate adjustment to both internal and external shocks more
effectively than administrative controls. These were not uniquely Australian ideas (Ross Garnaut called
it ‘the Washington consensus come to Australia’). But strong advocacy by the government and
wider public institutions helped them take root. And the overlay of specifically Australian policies
– including the
1983–1996
Prices and Incomes Accord –
helped maintain social and political support for reform. The strength of such equity considerations,
familiar from Giblin’s work in the 1930s, remains an important feature in Australian macroeconomic
policy debates to the present day.
Across both Golden Ages, Australia also had a world-leading role in two areas of practical policymaking:
quantitative macro-modelling; and economic data.
Australia’s first general equilibrium macro-econometric model was developed in the early 1940s by
– who else – Trevor Swan! Indeed Swan’s model has a decent claim to be among the first
globally, coming after Jan Tinbergen’s 1936 model of the Netherlands but more than a decade before
Lawrence Klein and Arthur Goldberger’s model of the United States. Once again, Tinbergen and Klein
both received Nobel prizes; Swan (who didn’t even publish his model during his lifetime) did not.
From the early 1970s, the Treasury and RBA built a suite of state-of-the-art open economy
macro-econometric models. 22
ORANI, one of the most advanced large-scale computable
general equilibrium models of the time, was used in the Crawford enquiries. 23
And in
the 1990s, Warwick McKibbin and Peter Wilcoxen developed the global hybrid DSGE/CGE model,
‘G-Cubed’, used most recently to provide widely cited assessments of the impact of US
tariffs. 24
The strength of Australia’s economic data has an even longer pedigree. 25
As the
first Government Statistician of New South Wales from 1886, Sir Timothy Coghlan produced a series of
yearbooks that set global standards for the measurement of aggregate income and occupational
classification in national censuses. 26
Half a century later, Keynes’ disciple Colin
Clark helped bring modern national income accounting to Australia. And there have been many other
examples of methodological trailblazing since then – including early adoption of survey sampling
approaches and an integrated business register; and pioneering use of satellite imaging and integrated
data sets. 27
The critical importance of effective data gathering to
Australia’s economic success was reflected: in its independent institutional setting at the heart of
government; in its job titles – the head economic adviser to government was for some time known as
the ‘Chief Statistician’; and in its ability to attract some of Australia’s top minds,
from Giblin, Sir Roland Wilson and Charles Wickens right up to today. 28
Before I leave this brief stroll through the past, I should acknowledge the key role that the ESA itself
played in this history. Many of those I’ve talked about today were presidents of the Society; and
many of their ideas appeared in its publications. 29
Like Australian macroeconomics in general, a defining
feature of the Society has been its focus on ideas that can be
implemented
, not just
admired. Douglas Copland, ESA’s first President, encouraged members to involve themselves in the
practical affairs of government and business – a principle captured in the Society’s aim
‘to encourage the teaching and study of economics and its application to Australia’. The RBA
has long been an active supporter of that program. Bernie Fraser held the Presidency of the Society while
he was RBA Governor in the early 1990s, hosting central council meetings in the Bank’s boardroom in
Martin Place. And two of our current Department Heads played leading roles more recently: Jacqui Dwyer
was an executive adviser on economics education; and Penny Smith was President of the NSW branch,
supporting the launch of the Society’s Women in Economics Network.
Will there be a third Golden Age? The worry … and the call to arms
By any standards, then, the past century has been an extraordinary story – of world-leading
thinking, deployed by the country’s best academic minds, working hand-in-hand with policymakers,
helping to pull the economy from the jaws of global turmoil and setting it on the path to prosperity.
So the killer question is this: can Australian macroeconomic thinking do it again, as the world economy is
once more in flux?
Ask that question of the macro research community today, and some seem worried:
about Australia’s ability to attract, retain and grow top academic talent; 30
about diminished academic incentives to work on issues of greatest policy relevance to Australia; 31
and
about perceptions of a weakened partnership between academia and policymakers. 32
Views differ on how serious those worries are. The best Australian research remains world-class. And we
don’t need to solve everything ourselves: the scope to draw on global thinking, adopting and
adapting it to Australian conditions, is far greater than in Giblin’s day.
But, where there
are
concerns, they should be seen as a call to arms, not a cause for
despondency. And that’s because the defining macroeconomic challenges of our age – the rolling
back of free trade; the implications of shifting geopolitical alliances; climate change; and the need to
reinvigorate productivity growth globally – lie right in our areas of comparative advantage.
The question is how to leverage that advantage. Let me break that into three sub-questions.
How can we build on Australia’s historical strength in open economy macro?
The long arc back to a more regionalised, less open, international trading system, coupled with the
realities of climate change, poses fundamental questions for Australian macroeconomic research along at
least three dimensions:
First, how will the composition and geographical location of our export markets change in response to
evolving trade policies and geopolitical alliances? What implications will those shifts have for
domestic output, investment, labour markets and pricing? And how do we harness our natural and human
resources to take advantage of those shifts?
Second, how will global commodity demand change over time? How long will markets for
‘traditional’ minerals including coal, gas and iron ore – mainstays of the economic
model in Australia today – persist? Will markets for ‘new economy’ minerals and
renewable energy sources take their place, and how can Australia best position itself to take
advantage of such trends? 33
And, third, how will these and other structural shifts change the sorts of shocks that stabilisation
policy, including monetary policy, needs to respond to? How will that influence optimal policy
design? And how might we need to adjust our thinking about trade-offs, across the different policy
goals and tools available?
Understanding the macroeconomic risks, and opportunities, from these structural changes is a vital
priority for research – to protect the economy, but also to ensure a clear path for future growth.
The good news is there is a rich history of Australian macro research 34
and modelling 35
to
draw on. The challenge is that this will only take us so far: dealing with tomorrow’s world will
require us to apply and extend that research to answer new questions.
How can we deepen the links between academia and policymakers?
Second, how can we deepen the links between academia and policymakers – the secret sauce of the
first two Golden Ages?
There are certainly some great examples today. Several Commissioners at the Productivity Commission are
current or former academics, including Catherine de Fontenay, ESA’s President. The Treasury’s
competition review has an expert advisory panel, including academics. And many of our top universities
and think-tanks have groups focused on fostering engagement on macroeconomic policy issues. 36
One of the most profound issues of our time is how to reverse the productivity slowdown. This is by no
means a uniquely Australian challenge – but the Second Golden Age demonstrated the power of
harnessing academic ideas and policy to drive a long-term recovery in productivity. Important work is
underway on this topic in the public sector, some of it in conjunction with academia: for example,
researchers at the Productivity Commission, Treasury and RBA have analysed the causes of the productivity
slowdown, its links to competition, innovation and dynamism, and the implications for the wider
economy. 37
And the Commission currently has five separate
inquiries underway into potential practical reforms, 38
which among other things will serve as inputs
to the Government’s Economic Reform roundtable in August. 39
A lot of research in this space makes use of Australia’s excellent microdata. The availability,
quality and breadth of Australian de-identified datasets on business and individuals is comparable to
anywhere in the world – due in no small part to the excellent work of the Australian Bureau of
Statistics, as well as the Australian Tax Office and Department of Social Services. 40
Being
at the forefront in this space offers scope for researchers to do globally relevant and frontier work, in
an Australian context: the best of both worlds. For example, at the RBA we are currently using it to
assess frontier questions around how monetary policy affects labour supply, and how pricing dynamics
changed during the recent increase in inflation. 41
How can we communicate the urgency of the challenge?
Third, what can we do as a community to communicate the urgency of the challenge, to show its importance
and draw new talent into this vital work? Bringing academics, policy economists and policymakers together
can help us reach a common understanding, of both the problems and the potential solutions. In that
context, conferences like this one can be extremely powerful, as can the work of the ESA more generally.
But it is crucial that both sides – policy and academia – buy in. And we need to focus, as a
profession, on
how
we communicate our thinking. The Golden Ages were full of people like
Giblin who specialised in translating big ideas into simple language. As Danielle Wood argued at last
year’s APS Economist conference, it has never been more crucial for economists to speak directly and
plainly. 42
The role of the RBA
Many of those I spoke with in preparing this speech emphasised the leading role that the RBA could play,
as one of the most prominent consumers and producers of Australian macro research; and as a training
ground. The RBA has a rich history at the leading edge of central bank research – and we remain
engaged across a wide range of issues today. 43
But as I’ve already noted navigating the complex
and unpredictable world of tomorrow will pose big new challenges.
That’s why, spurred on by the findings of the RBA Review, the Bank will be refreshing its research
strategy, with a new set of priorities, identifying the big questions that need to be answered to support
future policymaking. We’ll use those priorities to hold ourselves to account – but we’ll
need external help too. Part of that will involve deeper collaboration on specific research topics,
building on the centres of excellence here in Australia. 44
And part of it will involve finding new ways
to come together collectively, building on our existing workshops and conferences, and our six-monthly
academic advisory panel. 45
Here too there is more than an element of ‘back
to the future’ – it was nearly 75 years ago when Coombs, as head of the Commonwealth
Bank, the
de facto
central bank, first conceived of convening senior academics to critique
the exercise of policy. As we face into a more complex world, we need that support and challenge more
than ever. 46
Conclusion
Let me conclude.
A 100th birthday is always a cause for celebration.
For Australian macroeconomics that is true with bells on.
Two Golden Ages, forged in response to fundamental shifts in the global paradigm – powered by
world-class thinking, ruthlessly applied to a single end – improving the lot of the Australian
people.
As the global paradigm shifts again, the challenge is to go for the hat trick.
The
good news
is the policy questions facing us, and the world, lie four-square in
Australia’s areas of comparative advantage.
But to exploit that advantage, we need to relearn the lessons of the past – drawing in our best
talent, strengthening the incentives for policy-relevant research, and deepening the links between
academics and policymakers.
As a trading economy reliant on world markets, we have no choice but to respond. But we can go one better:
by marshalling our best brains we can turn this challenging environment to our advantage.
At the RBA, we stand ready to play our part in this great endeavour.
Thank you.
Endnotes
I am particularly grateful to Jonathan Hambur for
his assistance in writing this speech; he is truly a co-author. Thanks go also to Sam Munn and
Emily Shaw for their research support; to Selwyn Cornish, Guy Debelle, Catherine de Fontenay,
David Gruen, David Kalisch, Greg Kaplan, Andrew Leigh, Renee Fry-McKibbin, Warwick McKibbin, Alex
Millmow, James Morley, Alex Rosen, Dennis Trewin, David Vines and Justin Wolfers for their
helpful preliminary discussions; and to Anthony Brassil, Michele Bullock, Thomas Cusbert, Ian
Harper, Sarah Hunter, Jarkko Jaaskela, Bradley Jones, Christopher Kent, Claude Lopez, Mick Plumb
and Penny Smith for their comments and contributions on earlier drafts.
*
There is some debate as to exactly when the ESA
began, and hence when the centenary should be celebrated. The proposal that a new society be
established was first made by Lyndhurst Giblin in 1924 – a year he said ‘might perhaps
be called A.E.1 – the first year of economists in Australia’: Coleman W, S Cornish and
A Hagger (2006),
Giblin’s Platoon: The Trials and Triumph of the Economist in
Australian Public Life
, ANU E Press, Canberra. A Provisional Committee was established
later in 1924 – but the New South Wales and Victorian branches were formed in May 2025, and
a permanent Central Council only came into being in August of that year. So 2025 has a decent
claim to be the ESA’s ‘official birthday’ at the very least! I learned these and
many other facts from a draft of Alex Millmow’s excellent forthcoming history of the ESA. 1
Overseas readers may wish to consult Sitch R
(director) (1997),
The Castle
, Motion Picture, Working Dog Productions, Australia. A
vibe probably does not make a ‘School’ in the Chicago or Austrian sense, as Selwyn
Cornish discusses in Cornish S (2008), ‘Economics in Australasia’, in SN Durlauf and LE
Blume (eds),
The New Palgrave Dictionary of Economics
, Vo1 1, 2nd edition,
Palgrave Macmillan, London, pp 308–313. There is also an excellent treatment of this
question in Chapter 1 of Groenewegen P and B McFarlane (1990),
A History of Australian
Economic Thought
, Routledge, London. While my speech focuses primarily on economists
and academics active in the Australian economics community, there are of course also Australians
working overseas at the frontier of global economic thinking. 2
The historical parts of this speech build heavily
on the writings of, and conversations with, Selwyn Cornish, Alex Millmow and David Vines. 3
Overviews of this period include Keating M
(2014), ‘Chapter 20: The Evolution of Australian Macroeconomic Strategy Since World War
2’, in S Ville and G Withers (eds),
The Cambridge Economic History of
Australia
, Cambridge University Press, Port Melbourne, pp 438–461; Garnaut
R (1994), ‘Chapter 23: Trade Liberalization and the Washington Consensus in Australia,
in J Williamson (ed),
The Political Economy of Policy Reform
, Institute of
International Economics, Washington DC, pp 51–72; Millmow A (2010),
The Power of
Economic Ideas
, ANU E Press, Canberra. 4
The history of Australia’s evolving attitude
towards tariffs is fascinating. Lyndhurst Giblin was a co-author of the influential 1929 Brigden
Report (or
The Australian Tariff: An Economic Enquiry
to give it its true title),
which advocated the maintenance of high tariffs as a means of sustaining national income. Paul
Samuelson wrote a masterly summary of the intellectual provenance of this view in Samuelson PA
(1981), ‘Summing Up the Australian Case for Protection’,
Quarterly Journal of
Economics,
96(0), pp 147–160. 5
For a concise summary of Giblin’s life, see
William Coleman’s entry in King JE (ed) (2007),
A Biographical Dictionary of
Australian and New Zealand Economists
, Edward Elgar, Cheltenham. For a more in-depth
assessment, see Coleman, Cornish and Hagger, n 1. An evocative letter to the editor from Sidney
Crawford in the Adelaide-based
Advertiser
marking Giblin’s death described him
as having ‘the brain of an Einstein in the body of a prize fighter’: Crawford S (1951),
‘The Late Professor Giblin’,
The Advertiser
, 7 March. 6
See Giblin LF (1930),
Australia, 1930: An
Inaugural Lecture
, Melbourne University Press, Melbourne. Giblin’s conception of
the multiplier was certainly somewhat narrower than the modern understanding (see, for example,
Markwell DJ (2000), ‘
Keynes and
Australia
’, RBA Research Discussion Paper No 2000-04) – but the family
resemblance is unmistakeable. 7
As is well known, the row over Lang’s
proposals was so fierce, it led to a split in the Australian Labor Party in 1931. 8
Among other achievements in his long career,
Melville was also inaugural Professor of Economics, University of Adelaide; the first economist
appointed by the Commonwealth Bank; leader of Australia’s delegation to the Bretton Woods
Conference; Australia’s Executive Director, IMF and the World Bank; Vice-Chancellor of the
ANU; and Director of the Tariff Board. 9
See Millmow, n 4, p 85. Interestingly,
Giblin also tentatively supported a floating exchange rate – another idea that proved ahead
of its time! 10
See Markwell, n 7, pp 20–21. 11
See Coleman, Cornish and Hagger, n 1; Markwell,
n 7. 12
Coombs was also Economic Advisor, Treasury;
inaugural head, Department of Postwar Reconstruction; leader of Australian delegations to the Hot
Springs Conference in 1943, the Geneva conference that created the GATT (1946) and the Havana
conference (1947) on international trade; Chancellor ANU; and Economic Advisor to Prime Minister
Whitlam. 13
Unlike Giblin and the multiplier, the model is
sometimes known as the ‘Solow/Swan growth model’. Solow himself was gracious in
recognising Swan’s contribution: see Solow R (1997), ‘Swan, Trevor W’, in T Cate
(ed),
An Encyclopedia of Keynesian Economics,
2nd edition, Edward Elgar, Cheltenham
and Northampton. 14
For further discussion of Swan’s life and
contributions, see Dimand RW and BJ Spencer (2008), ‘Trevor Swan and the Neoclassical Growth
Model’, NBER Working Paper No 13950; Cornish S (2024), ‘Trevor Winchester Swan: Life
and Contributions to Economic Theory and Policy’,
Economic Record
, 100(330),
pp 281–437. 15
For a good overall summary of this period, see
Berger-Thomson L, J Breusch and L Lilley (2018), ‘Australia’s Experience with Economic
Reform’, Treasury Working Paper. For discussions of Australia’s financial, capital and
exchange rate deregulation, see Grenville S (1991), ‘
The Evolution of Financial
Deregulation
’, in
The Deregulation of Financial Intermediaries
,
Proceedings of the RBA Annual Conference,
20–21
June;
Debelle G and M Plumb (2006), ‘The Evolution of Exchange Rate Policy and Capital Controls in
Australia’,
Asian Economic Papers
, 5(2), pp 7–29; Ballantyne A, J
Hambur, I Roberts and M Wright (2014), ‘
Financial Reform in Australia and China
’,
RBA Research Discussion Paper No 2014-10. 16
See, for instance, Kelly P (2000), ‘
The Politics of Economic Change in
Australia in the 1980s and 1990s
’, in D Gruen and S Shrestha (eds),
The
Australian Economy in the 1990s
, Proceedings of the RBA Annual Conference,
24–25
July; Garnaut, n 4. 17
For a short summary of Corden’s work and
impact, see Irwin D (2023), ‘Trade Theory and Trade Policy: The Work of Max Corden,
1927–2023
’,
VoxEU
, 28 October.
Corden’s later work on ‘Dutch Disease’, with Bob Gregory and Peter Neary, would
also prove vital for understanding the impact of the Noughties mining boom on the structure of
the Australian economy. See, for instance, Corden WM and JP Neary (1982), ‘Booming Sector
and De-industrialisation in a Small Open Economy’,
The Economic Journal
,
92(368), pp 825–848; Gregory RG (1976), ‘Some Implications of the Growth in the
Mineral Sector’,
Australian Journal of Agricultural Economics
, 1(Jul),
pp 1–28. More recent work includes: Fry-McKibbin R, M Greenwood-Nimmo, R Kima and V
Volkov (2025), ‘A Three-sector Structural VAR model for the Australian Economy’,
Journal of Economic Dynamics and Control
, 170; Kulish M, J Morley, N Yamout and F
Zanetti (2023), ‘Dutch Disease, Unemployment and Structural Change’, CAMA Working Paper
No
38/2023
; P Downe, K Hanslow and P Tulip (2014), ‘
The Effect of the Mining Boom on the Australian
Economy
’, RBA Research Discussion Paper No 2014-08. 18
See Vines D (2021), ‘A Productivity
Commission: A Proposal for an Australian-style Approach to Creating a Policy-Reform Process for
the UK’, INET Oxford Working Paper No 2021-13. During his long career, Crawford was also
Director of Research at the Department of Postwar Reconstruction; Inaugural head of the Bureau of
Agricultural Economics; head of the Department of Commerce and Industry; head of the Department
of Trade; and first Vice-Chancellor and then Chancellor, ANU. 19
Corden and Gruen had collaborated on a 1970
paper that set the scene for this change: Gruen FH and WM Corden (1970), ‘A Tariff That
Worsens the Terms of Trade’, in IA McDougall and RH Snape (eds),
Studies in
International Economics: Monash Conference Papers
, North-Holland, Amsterdam,
pp 55–58. Interestingly, at the time, Whitlam motivated the 1973 cuts as being more
about bearing down on inflation than on improving the functioning of the economy. 20
Productivity Commission (2003), ‘From
Industry Assistance to Productivity: 30 Years of “The Commission”’, Productivity
Commission Paper. 21
See, for instance, Higgins CI and VW FitzGerald
(1972), ‘An Econometric Model of the Australian Economy’,
Journal of
Econometrics
, 1(3), pp 299–265; Norton WE and JF Henderson (1972), ‘A
Model of the Australian Economy: A Further Report’, RBA Occasional Paper No 3G; Jonson PD,
ER Moses and CR Wymer (1977), ‘The RBA76 Model of the Australian Economy’, in WE
Norton (ed),
Conference in Applied Economic Research
, Proceedings of the RBA Annual
Conference, Sydney,
5–6
December; Murphy CW (1988),
‘An Overview of the Murphy Model’, in ME Burns and CW Murphy (eds),
Macroeconomic
Modelling in Australia, Australian Economic Papers
, 27(Supp), pp 175–199;
Taplin B, P Hilek, L Antioch, A Johnson, P Parameswaran and C Louis (1993), ‘Documenting of
the Treasury Macroeconomic (TRYM) Model of the Australian Economy’, in S Ichimura and Y
Matsumoto (eds),
Econometric Models of the Asian Pacific Countries
, Springer, Tokyo. 22
Dixon PB (1982),
ORANI, A Multisectoral
Model of the Australian Economy
, North-Holland, New York. 23
See, for instance, McKibbin WJ, M Noland and G
Shuetrim (2025), ‘The Global Economic Effects of Trump’s 2025 Tariffs’, PIIE
Working Paper No 25-13. 24
I am grateful to Australian Statisticians David
Gruen, David Kalisch and Dennis Trewin for discussion on this topic. I have not done justice to
their rich thoughts in this short summary – but the ABS’ own publication is an
excellent read: Australian Bureau of Statistics (25005), ‘Informing a Nation: The Evolution
of the Australian Bureau of Statistics
1905–2005
’, ABS
Catalogue No 1382.0. 25
Like Giblin, Coghlan lived a very full life.
Before becoming the Government Statistician he was assistant engineer to the Harbours and Rivers
Branch of the NSW Public Works Department, in which role he helped design Sydney’s water
system! He had a side hustle as a journalist, writing under various aliases, and railing among
other things against the destruction of Sydney’s native flora. In later life he was the
Agent-General for New South Wales in London. For more, see Hicks N (1981), ‘Coghlan, Sir
Timothy Augustine (1855–1926)’, in B Nairn and G Serle (eds),
Australian
Dictionary of Biography
, Vol 8, Melbourne University Press, Melbourne,
pp 48–51. 26
See Australian Bureau of Statistics (2020),
‘Improving Agricultural Crop Statistics Using Satellite Data’, 26 June; Australian
Bureau of Statistics, ‘Data Integration’, available at
<https://www.abs.gov.au/about/data-services/data-integration>. 27
Wilson was Australia’s longest-service
Treasury Secretary and later became Chair of Qantas and the Commonwealth Bank: Sir Roland Wilson
Foundation, ‘Sir Roland Wilson’, available at
<https://srwfoundation.anu.edu.au/about/sir-roland-wilson>. Wickens helped establish the
forerunner to the ANU, among other achievements: Hawkins J (2019), ‘Charles Wickens: The
Australian Government’s First Economist’,
History of Economics Review
,
73(1), pp 85–96. 28
Swan TW (1956), ‘Economic Growth and
Capital Accumulation’,
Economic Record
, 32(2), pp 334–361; Corden M
(1957), ‘The Calculation of the Cost of Protection’,
Economic Record
,
33(64), pp 29–51; Salter WEG (1959), ‘Internal and External Balance: The Role of
Price and Expenditure Effects’,
Economic Record
, 35(71), pp 159–297;
Swan TW (1980), ‘The Principle of Effective Demand: A Real Life Model’,
Economic
Record,
65(4), pp 378–398. 29
Jacqui Dwyer and colleagues at the RBA have
described at some length the challenges of declining enrolments and poor diversity in economics
in Australia: see, for example, Dwyer J (2024), ‘
The State of Economics
’, Address to The
Economic Society of Australia, Sydney, 28 May. 30
Factors cited here include the intense pressure
to publish in Top Five or A* economics journals, a list which no longer contains any Australian
publications (Australian Business Deans Council (2023), ‘2022 ABDC Journal Quality List
Released’, Media Release, 16 March), and increased academic specialisation in narrow
areas of theoretical research. Neither point is unique to Australia of course – indeed,
recent research has challenged whether the increasing global concentration in top tier journals
and institutions is good for economics in general: see, for instance, Freeman RB, D Xie, H Zhang
and H Zhou (2024), ‘High and Rising Institutional Concentration of Award-Winning
Economists’, 25 June, summarised in Rodrik D (2024), ‘Is Economics in Need of
Trustbusting?’,
Financial Times
, 30 August. 31
Factors cited here include the perceived
reluctance by some universities to release academics to support policy work, and a reduced focus
on research in public policy institutions – a point echoed, for example, in the RBA Review:
see recommendations 9 and 11.4 in Australian Government (2023), ‘Review of the
Reserve Bank of Australia – Final Report’. 32
See, for instance, the work of The Superpower
Institute. Fascinatingly, Colin Clark predicted many of these issues 85 years ago, writing
about the risks from burning fossil fuels faster than the environment can bear, and the
opportunities from solar power: see Garnaut R (2012), ‘Removing Climate Change as a Barrier
to Economic Progress: Twenty-second Colin Clark Memorial Lecture’,
Economic Analysis
and Policy
, 43(1), pp 31–47 for a discussion of Clark’s thinking. 33
See, for instance, Dungey M and A Pagan (2000),
‘A Structural VAR Model of the Australian Economy’,
Economic Record
,
76(235), pp 321–342. Examples of RBA work include Jaaskela JP and P Smith (2013),
‘Terms of Trade Shocks: What Are They and What Do They Do?’,
Economic
Record
, 89(35), pp 145–159; Kulish M and DM Rees (2017),
‘Unprecedented Changes in the Terms of Trade’,
Journal of International
Economics
, 108, pp 351–367; Hendy P and B Beckers (2024), ‘
How Do Global Shocks Affect Australia?
’,
RBA Research Discussion Paper No 2024-10. 34
For example, many of the core models used by
policy institutions are small open economy models with a resource sector, such as the RBA’s
macro-econometric MARTIN model (Ballantyne A, T Custbert, R Evans, R Guttmann, J Hambur, A
Hamilton, E Kendall, R McCririck, G Nodari and D Rees (2019), ‘Martin Has Its Place: A
Macroeconometric Model of the Australian Economy’,
Economic Record
, 96(314),
pp 225–251) and DSGE DINGO model (C Gibbs, J Hambur and G Nodari (2018), ‘
DSGE Reno: Adding a Housing Block to a Small
Open Economy Model
’, RBA Research Discussion Paper No 2018-04; Rees D, P Smith and J
Hall 2016, ‘A Multisector Model of the Australian Economy’,
Economic
Record
, 92(298), pp 374–408); Treasury’s EMMA model (Bullen J, B
Conigrave, A Elderfield, C Karmel, L Lucas, C Murphy, H Ruberl, N Stoney and H Yao (2021),
‘The Treasury Macroeconometric Model of Australia: Modelling Approach’, Treasury
Working Paper No 2021-09). 35
For example, UNSW’s Institute of Global
Finance; ANU’s Centre for Applied Macroeconomic Analysis; and the University of
Melbourne’s Melbourne Institute. Think-tanks including e61 and the Grattan and Lowy
institutes regularly produce policy-relevant research. 36
See, for example, Andrews D and D Hansell
(2021), ‘Productivity-enhancing Labour Reallocation in Australia’,
Economic
Record
, 97(3187), pp 157–169; Andrews D, J Hambur, D Hansell and A Wheeler
(2022), ‘Reaching for the Stars: Australian Firms and the Global Productivity
Frontier’, Treasury Working Paper No 2022-01; Hambur J (2023), ‘Product Market
Competition and its Implications for the Australian Economy’,
Economic Record
,
99(324), pp 32–57; Champion M, C Edmond and J Hambur (2023),
‘Competition
Markups and Inflation: Evidence from Australian Firm-level Data
’, Paper presented at
the RBA Annual Conference, Sydney,
25–26
September;
Hambur J (2023), ‘
Did Labour Market
Concentration Lower Wages Growth Pre-COVID?
’, RBA Research Discussion Paper No
2023-02. 37
Productivity Commission (2025), ‘PC Opens
Consultation on Reform Areas for Productivity Inquiries’, Media Release, 18 May. 38
Treasury (2025), ‘Economic Reform
Roundtable’, available at <https://treasury.gov.au/review/economic-reform-roundtable>. 39
Further detail on the ABS’ development
agenda ‘Big Data, Timely Insights’ is available at
<https://www.abs.gov.au/about/key-priorities/big-data-timely-insights-phase-2/about-program>. 40
Other recent frontier work looks at how
COVID-era support policies affected the economy, and the lessons for designing policy in response
to future shocks, which may be extremely valuable in a more uncertain and volatile world. For
example, the effects of Australia’s JobKeeper program (Bradshaw N, N Deutscher and L Vass
(2023), ‘The Employment Effects of JobKeeper Receipt’, Treasury Working Paper No
2023-04; Bishop J and I Day (2020), ‘
How Many
Jobs did JobKeeper Keep?
’, RBA Research Discussion Paper No 2020-07; Andrews D, E
Bahar and J Hambur (2025), ‘The Effects of
COVID-19
and
JobKeeper on Productivity-enhancing Reallocation in Australia’,
Economic
Record
, 101(333), pp 142–168), and the early superannuation release program
(Sainsbury T, R Breunig and T Watson (2022), ‘
COVID-19
Private
Pension Withdrawals and Unemployment Tenures’, IZA Discussion Paper No 15399; Hamilton S, G
Liu, J Miranda-Pinto and T Sainsbury (2023), ‘Early Pension Withdrawal as Stimulus’,
IIEP Working Paper No 2023-02). 41
Wood D (2024), ‘Here to Help: The Role of
Economics in Contemporary Policy Challenges’, Paper presented at the Australian Public
Service Economist Conference, Melbourne, 25 November. 42
Past highlights include Debelle G and S Fischer
(1994), ‘How Independent Should a Central Bank Be?’ in JC Fuhrer (ed),
Goals,
Guidelines, and Constraints Facing Monetary Policymakers
, Federal Reserve Bank of
Boston Conference Series No 38, North Falmouth, Massachusetts, pp 195–221; Borio C and
P Lowe (2002), ‘Asset Prices, Financial and Monetary Stability; Exploring the Nexus’,
BIS Working Paper No 114; Blanchard O and J Simon, ‘The Long and Large Decline in I.S.
Output Volatility’,
Brooking Paper on Economic Activity
, 1(2001),
pp 135–164. Current work assessing and critiquing overseas findings in
the Australian context: Brassil A (2022), ‘
The
Consequences of Low interest Rates for the Australian Banking Sector
’, RBA Research
Discussion Paper No 2022-08; M Read (2024), ‘
Sign Restrictions and Supply-demand Decomposition
of Inflation
’, RBA Research Discussion Paper No 2024-05. 43
For example, Bruce Preston has written
extensively on inflation expectation and fiscal monetary interactions, which is relevant to
challenges around optimal policy mixes and policy trade-offs with supply shocks (e.g. Eusepi S
and B Preston (2018), ‘Fiscal Foundations of inflation: Imperfect Knowledge’,
American Economic Review
, 108(9), pp 2551–2589). James Morley has written
on neutral rates and output gaps, which is important in the context of the productivity slowdown
(e.g. Kamber G, J Morley and B Wong (2018), ‘Intuitive and Reliable Estimates of the Output
Gap from a Beveridge-Nelson Filter’,
Review of Economic Statistics
, 100,
pp 550–566) and Greg Kaplan has shown how household heterogeneity can influence the
impact of monetary policy, which is important in thinking broadly about the best policy mix in
response to various shocks (e.g. Kaplan G, B Moll and GL Violante, ‘Monetary Policy
According to HANK’,
American Economic Review
, 108(3), pp 697–743).
Recent examples of external research with RBA staff and/or RBA models include Brassil A, C Gibbs
and C Ryan (2025), ‘
Boundedly Rational
Expectations and the Optimality of Flexible Average Inflation Targeting
’, RBA
Research Discussion Paper No 2025-02; Gross I and A Leigh (2022), ‘Assessing Australian
Monetary Policy in the Twenty-first Century’,
Economic Record
, 98(322),
pp 271–295; Liu X, AR Pagan and T Robinson (2018), ‘Critically Assessing
Estimated DSGE Models: A Case Study of a Multi-sector Model’,
Economic Record
,
94(307), pp 349–371. 44
For further details, see RBA, ‘
RBA
Annual Conferences
’, ‘
Annual Research
Workshops
’ and ‘
Academic
Panel
’. 45
Coombs’ meetings are discussed in in Brown
N (2001),
Richard Downing: Economics, Advocacy and Social Reform in Australia
,
Melbourne University Press, Melbourne. 46