Cangiano, Marco, 1996, “Accountability and Transparency in the Public Sector: The New Zealand Experience,” International Monetary Fund Working Paper (WP/96/122), (November).
Costello, The Rt. Hon. P., and Ian Macfarlane, 1996, “Statement on the Conduct of Monetary Policy,” August 14, reprinted in Reserve Bank Bulletin (September).
Cukierman, Alex, 1992, Central Bank Strategy, Credibility and Independence: Theory and Evidence (Cambridge, Massachusetts: MIT Press).
Debelle, Guy, and Glenn Stephens, 1995, “Monetary Policy Goals for Inflation in Australia,” Reserve Bank of Australia, Research Discussion Paper 9503 (March).
Debelle, Guy, and Stanley Fischer, 1994, “How Independent Should a Central Bank Be?” in Goals, Guidelines and Constraints Facing Monetary Policymakers, Conference Series No. 38, ed. by Jeffrey C. Fuhrer (Boston, Massachusetts: Federal Reserve Bank of Boston).
- Search Google Scholar
- Export Citation
)| false Debelle, Guy, and Stanley Fischer, 1994, “ How Independent Should a Central Bank Be?” in Goals, Guidelines and Constraints Facing Monetary Policymakers, Conference Series No. 38, ed. by ( Jeffrey C. Fuhrer Boston, Massachusetts: Federal Reserve Bank of Boston).
Fraser, Bernie, 1994, “The Art of Monetary Policy,” Speech Delivered at Twenty-Third Conference of Economists, Surfer’s Paradise, Australia (September 26).
Fraser, Bernie, 1996, “What is the Optimal Inflation Target?,” Remarks at a symposium to mark the Twenty-Fifth Anniversary of the Monetary Authority of Singapore, May 10, Reserve Bank Bulletin, June.
Fraser, Bernie, 1996, “Reserve Bank Independence,” Speech to the National Press Club, Canberra, August 15, Reserve Bank Bulletin, September.
Green, John, 1996, “Inflation Targeting: Theory and Policy Implications,” International Monetary Fund Staff Papers, Vol. 43, No. 4 (December).
Grilli, Vittario, Donato Masciandaro, and Guido Tabellini, 1991, “Political and Monetary Institutions and Public Financial Policies in the Industrial Countries,” Economic Policy, Vol. 6 (October), pp. 342–91.
Haldane, Andrew, 1996, “Some Thoughts on Inflation Targeting,” Paper prepared for the Kinstanz Seminar (Bank of England) (April).
Macfarlane, Ian, 1996, “The Task of Monetary Policy,” Speech Delivered to CEDA Annual General Meeting Dinner, Melbourne, Australia (November 28).
Reith, The Hon. Peter, 1995, “Towards a Best Practice Australian Public Service,” Discussion paper issued by the Minister for Industrial Relations and Minister Assisting the Prime Minister for the Public Service (November).
Reserve Bank of Australia, 1996, Bulletin, September.
Wynne, Mark and Sigalla, Fiona, 1996, “A Survey of Measurement Biases in Price Indexes,” Journal of Economic Surveys, Vol. 10, pp. 55–89.
This chapter was prepared by Ray Brooks. The discussion of fiscal policy reform draws on an unpublished paper by Gloria O. Pasadilla, who was a summer intern in the Fund during 1996. The paper also builds on earlier work in this area that was presented in the background paper on Selected Issues for the 1995 Article IV consultation with Australia (SM/96/62, 3/14/96).
The essentials of this Act were already in the Commonwealth Bank Act of 1951.
It should be noted that all three studies of independence are somewhat dated and do not take account of the changes in New Zealand in 1989 and France and Spain in 1994.
M3 in Australia is defined to include currency plus all bank deposits of the private nonbank sector. Broad money is M3 plus borrowing from the private sector by nonbank financial institutions less the latter’s holdings of currency and bank deposits.
The Australian Bureau of Statistics includes mortgage rates directly in the headline CPI, with a weight of about 6 percent. Mortgage rates are closely related to short-term interest rates, as most mortgages in Australia are of the floating rate type. As a result, changes in monetary policy tend to have a pronounced effect on the CPI.
The Treasury underlying CPI is derived by excluding the following items from the CPI basket: meat and seafood, fresh fruit and vegetables, clothing, government-owned dwelling rents, mortgage interest charges, consumer credit charges, local government rates and charges, household fuel and light, automotive fuel, postal and telephone services, urban transportation fares, tobacco and alcohol, health services, Pharmaceuticals, holiday travel and accommodation, and education and child care.
Tax effects are not excluded from the measure of underlying inflation, but are deducted by the Reserve Bank from time to time as one-off changes in the price level to obtain a “true” underlying measure (“ongoing inflation”) which reflects the balance between supply and demand conditions in the economy.
In the case of a demand shock, for example, an unanticipated increase in aggregate demand, the monetary policy response—raising interest rates—would serve the dual purposes of slowing activity and lowering inflation. However, in the case of a supply shock, for example, an unanticipated fall in aggregate supply, monetary policy aimed at dampening inflation would tend to exacerbate the shortfall in output.
In part, the United Kingdom has attempted to address concerns about forecasting errors by publishing the forecasts complete with confidence ranges. The latest Inflation Report (Bank of England, November 1996), presents a central projection for inflation of 2½ percent by end-1997, and estimates a 70–80 percent chance that inflation will be in the range of about 1½–3½ percent by end-1997.
Canada, Finland, New Zealand, Sweden, and the United Kingdom.
France, Germany, Japan, Switzerland, and the United States.
Headline inflation rate are used in the comparison, even though this is not the variable targeted in Australia or several other countries, as underlying inflation rates are not available for all the countries included.
The Federal fiscal structure is discussed in more detail in the background paper on Selected Issues for the 1995 Article IV consultation (SM/96/62, 3/14/96).
The terms “states” is used in this chapter to denote the six states and two territories of Australia: New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia, and the Northern Territory and Australian Capital Territory.
The underlying budget balance is defined as the headline balance less equity transactions (particularly privatization receipts) and net policy lending.
The bill may be enacted by mid-1997.
This contrasts with the legislation introduced in NSW in 1995, which targets zero net public debt by 2020. However, the NSW legislation also includes principles for sound fiscal policy similar in many respects to the Charter (Box 4).
The financial risks referred to include: risks arising from excessive net debt; commercial risks arising from ownership of public trading enterprises and public financial enterprises; risks arising from erosion of the tax base; and risks arising from the management of assets and liabilities.
In New Zealand, while there is no principle outlining a counter cyclical role for fiscal policy, the FRA permits the government to depart from the principles in the FRA, provided it explains its reasons and indicates how, and within what time frame, it plans to return to them. The requirement for an explicit explanation of temporary departures from the medium-term objectives of fiscal policy is also a feature of Australia’s Charter, as is the need for an explanation of how these temporary departures would be reversed.
Net public debt in New Zealand was 43½ percent of GDP at end-June 1994, the year the FRA was introduced. It has since fallen to 32½ percent of GDP at end-June 1996. This compares with net Commonwealth government debt in Australia of 21 percent of GDP in 1995/96, up from 4 percent in 1989/90 (including unfunded employees entitlements would raise the ratio to 35 percent of GDP at end-June 1996).
In New Zealand, the balance is defined as the difference between operating expenses and revenues, based on accrual accounting, whereas in Australia cash accounting concepts are used.
The National Commission of Audit (1996) recommended that the Commonwealth government formally adopt accrual accounting as the basis for financial reporting. It recommended that the 1998/99 Budget be presented on an accrual basis, following a move to full accrual accounting by December 1997. The Commission also prepared a trial “whole of Commonwealth government” financial report for 1994/95, based on entities that report to Parliament on an accrual basis. This included a trial “balance sheet” for end-June 1995.