Economics - Research Publications
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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.