Economics - Research Publications
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ItemEditors' Report 2016(WILEY, 2017-06)
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ItemThe Economics of Ageing-What do you Face?(Wiley, 2019-12-01)The economics of ageing is the study of economic decision‐making by individuals and government aimed at fostering well‐being in old age. These decisions include preparing for old age and dealing with the risks of old age. The risks are substantial. Using the life‐cycle model, this article considers the risks for well‐being that people face in retirement and the role of government and private insurance in meeting those risks. The perspective of the life‐cycle model is also used to consider the gender gap in wealth on retirement.
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ItemPolicy Forum: Economics and Populism Introduction(WILEY, 2018-09)
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ItemEditors' Report 2017(Wiley, 2018-06-01)
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ItemA Keynesian model of aggregate demand in the long-run(WILEY, 2021-07)Abstract This paper develops the Keynesian theory of aggregate demand in the long‐run in which persistently low levels of aggregate demand can generate persistently low levels of activity with the associated persistently high rates of unemployment. Wages are determined by firm‐worker bargaining/sharing. Investment is influenced by monopoly power, aggregate demand and the interest rate. Decreasing rates of deflation of money wages and prices even at high rates of unemployment are prevented by workers being assumed to be loss averse with respect to reductions in their wages below a reference real wage.
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ItemThe Economics of Ageing—What Do We Face?(Wiley, 2020-12-22)We, as taxpayers, face challenging problems in assisting the well‐being of old people mainly because preparing for and living through old age is a risky business. Through government, taxpayers can provide some insurance against the risks of old age, especially the risk of bad health and the risk of a long life. However, the ageing population suggests that maintaining this support will require increased taxation. This article quantifies this challenge for Australia and concludes that although increased taxation may be required it will be easily affordable from the much higher incomes generally received due to the secular increase in productivity.
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ItemObituary for Joseph Ezra Isaac, AO FASSA: 1922–2019(Wiley, 2020-12-01)Celebrated academic and public servant emeritus professor the Hon. Joseph Isaac died on 17 September 2019 at the age of 97. He was one of the most influential contributors to both academic scholarship and public policy in Australian industrial relations for more than 60 years.
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ItemMacroeconomic Policy to Aid Recovery after Social Distancing for COVID‐19(Wiley, 2020-09-14)Using the Keynesian model set out in McDonald (2020), in which downward wage rigidity is supported by worker loss aversion with respect to wages, this article shows that a period of social distancing (SD) can leave a post‐SD economy with both stimulatory and depressive effects. A loss of productive capacity is stimulating. Costs of restarting firms, lower labour productivity when restarted and a desire to restore wealth from debt incurred during the period of SD are depressive. If, as seems highly probable, the net effect on economic activity is negative then a fiscal expansion can restore activity. To avoid an increased government budget deficit, this expansion would probably require an increased tax rate. Reductions in real wages may also be necessary. A desire to balance the government budget combined with no increase in the tax rate would be unfortunate, because it would cause a further contraction in activity from its post‐SD level.
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ItemJohn Maynard Keynes, Joan Robinson and the prospect theory approach to money wage determination(Wiley, 2019-02-01)In the 1930s, John Maynard Keynes and Joan Robinson observed a flex–fix sequence of money wage adjustment, which is changes in aggregate demand may initially change money wages but then money wages will settle at new levels even if unemployment is high. Their discussion of this pattern alluded to the importance of loss aversion in wage setting. This paper shows how loss aversion in wage setting can explain the flex–fix sequence of money wage behaviour in a way which is consistent with the observations and ideas of Keynes and Robinson.
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Item‘We Will End Up Being a Third Rate Economy … A Banana Republic’: How Behavioural Economics Can Improve Macroeconomic Outcomes(Wiley, 2017-06-01)To address the economic problems facing Australia in 1986 required wage restraint, which required in turn overcoming loss aversion by workers with respect to their wages. The Prices and Incomes Accord was able to do this. Attempts to address Australia's current economic problems are stymied by tax resistance. Addressing tax resistance requires overcoming loss aversion by voters with respect to their post-tax incomes. The success of the Accord suggests that Accord-type policies could reduce tax resistance by broadening people's perspective beyond their post-tax incomes to the broader spread of benefits for them and others.