The political economy of macroeconomic management in Australia in the 20th Century

This work is studying the development of the set of ideas - and a set of policy-making capabilities - that made the Hawke-Keating reforms possible in Australia in the 1980s and 1990s. The ideas included are as follows: (1) inventing a three sector model in the late 1920s; (2) showing in the early 1930s why output & employment depend on aggregate demand thereby inventing, in perhaps the earliest form anywhere, a Keynesian multiplier; (3) understanding in the 1950s how to simultaneously achieve internal and external balance, for which Trevor Swan is particularly responsible, and understanding in the 1950s how to foster economic growth, for which Swan was also responsible; (4) understanding how to best liberalise trade, an analysis pioneered in particular by Max Corden; and (5) understanding the “Dutch disease” and how to deal with it. These key ideas have gone on serving the country well, ever since they began to be developed in the early 20^th Century. Our research is in the process of showing how this new, and surprisingly original, set of ideas fitted into an overall intellectual narrative from the 1920s until now. In so doing we will also show how their ideas have helped to influence the economic development Australia during this last century. Furthermore these ideas appear to be of considerable significance for other countries.