Impact of Macroeconomic Policies

Impact of Macroeconomic PoliciesTable of Contents (Jump to)The expansionary fiscal constitution decisions of the Reserve Bank of Australia (RBA) during the six months after the international fiscal crisis (GFC) escalated in September 2008.1. Executive Summary2. Mo net incomeary Policy of Australia after GFC2.1 Arguments in Support of insurance Decision2.2 Arguments against the insurance decision3. ConclusionReferencesThe expansionary fiscal indemnity decisions of the Reserve Bank of Australia (RBA) during the six months after the spherical monetary crisis (GFC) escalated in September 2008.1. Executive SummaryThe assignment is based on the Global fiscal Crisis 2008 and its affect on the Australian sparing. The assignment coers the chief(prenominal) reason behind the GFC and the receipt of Australias have got affirm regarding the expansionary pecuniary policy to fight the Global financial Crisis. Later assignment as well has the arguments in support and against the poli cy decision. Later it is concluded by quest(a) the evaluation outcomes.2. Monetary Policy of Australia after GFCThe global Financial Crisis of 2008 was considered as the worst financial crisis since year 1930 by several economists. It leads to the total adjourn of galore(postnominal) large financial institutions, the rescue of many banks by the brass and major downfall of the worlds stock grocery store (Williams, 2012). repayable to the crash of the global share securities industry place, the Australian Dollar also infractd. The net wealth of Australia was chastised and the unemployment was increase considerably. There was a wave of uncertainty that brush the entire saving of Australia. . As per the data, the average of the kinfolk debt was increased from increased from $A190 billion in 1990 to $A1.1 trillion in year 2008 (ABS, 2009). The direct pretend of the Global crisis 2008, in Australia wasThe decline of Australian Dollar from 0.98 to 0.60The decline in the summa tive value of the households between 13 to 14 %The significant decline in the household manipulationThe increase in saving of household from 1.2 % to 8.5 %Increase in rate of unemployment from 4.1% to 5.8 %The Australian government was very propel to take the action against the occurrence in order to trim back the impact of the Global Financial crisis 2008. The set aside bank of Australia decided to loosen the monetary policy for one year with the aim of rectifying the loss of big moving in and consumers that occurred due to Global Financial Crisis. Under this policy the RBI do the considerable reduction in the interest evaluate and increased the silver supply in market. This led to overall consumption in the market of Australia (Green et al., 2009). The cash rate as also reduced by the reserve Bank and it lead to overall 4 % drop within the months of policy formulation.The monetary policy had the following effects on the Australian economyIt showed the positive result in d ealing with Global Financial Crisis and prevented the Australian economy from recession lead to an apparent recoveryThe investment and consumption levels were increased and the unemployment rate was decreased that showed the favorable national output and substance demand (Gregory, 2008)The impact of the expansionary monetary policy and the fiscal led to a positive impact in relation to the level of Gross home(prenominal) Product growth rate of 0.9% in December 2009 quarter from -0.8% in December 2008 (Rotheli, 2010)As per the treasury reports of Australia, without implementation of the expansion monetary policy the gross domestic product of the economy would have been accounted to 0.7 percent (ABS, 2013).2.1 Arguments in Support of policy DecisionThe monetary policy regulated by reserve bank of Australia played a significant role in fighting with global financial crisis. The monetary policy helped the Australian economy to fight the severe inflation characterizes. In the beginni ng of the global financial crisis, the conservative monetary policy was formulated and implemented in response to the substantial decrease in the aggregate demand and the declining of the global financial market circumstances. The Australian government took the conventional monetary action with finis and speed.The target national funds rate was slash rapidly from cardinal hundred and xx-five points in September 2007 to zero till twenty five points in December 2008 (ATO, 2009). The other countries also followed this path by decreasing the interest rates on an average by 330 points in the developed countries and 300 points in developing economies. In the current situation Australia is one of the major four developed economies with official interest rates above 1 % (ABS, 2010).According to the world standards, Australia responded reasonably to the Global Financial Crises through a good combination of government stimulus, responsive policies of reserve bank, resources boom and pruden tial standards that were pre-existing.2.2 Arguments against the policy decisionThere are many weak points in the monetary policy by the Reserve bank of Australia. There were many discrepancies that were exposed later. The arguments against the policy decision include the following pointsThere was no uniformity in the prices of Australian stock market and this anchored the inflation expectations.The implementation timing of the monetary strategies will be hooklike on recovery pace and the return of normal conditions of the financial markets (Lunn, 2008).The policy raised the concerns about the fiscal stability in international marketThe policy was not able to deal with the major problem of unemployment in Australia. The unemployment figures of Australia during the Global Financial crisis were at 6.5 percent as compared with the joined Sates was over 10 percent. In the current situation, the current unemployment rate in Australia is 5.3%. whence they have improved and recovered from the crisis still did not move in the required rate (Eslake, 2009).3. ConclusionFor determining the Australias economic condition there are many factors that must be considered. This report cogitate on the major factors of the policies implemented by the Australian government to reduce the impact of Global Financial Crisis. The Australian government was very cue in taking the action against the losses of Global financial crisis. It is famed that the policies and procedures of the Australian government helped them to recover fast and they are much out front of other developed nations. Australia responded reasonably to the Global Financial Crises through a good combination of government stimulus, responsive reserve bank, resources boom and prudential standards that were pre-existing. Even though the current situation of Australia has not reached the level of pre GFC situation, but still it regained mush better than the other developed nations like United States of America.Referen cesABS (Australian agency of Statistics) (2009)Australian Social Trends4102.0. Available at www.abs.gov.auaccessed 18/4/10.ABS (Australian Bureau of Statistics) (2010)Labour Force, Australia6202.0 Available at www.abs.gov.auaccessed 18/4/10.ATO (Australian Tax Office) (2009)Commissioner of Taxation yearbook Report 2008-09 Available atwww.ato.gov.auaccessed on 11/02/09ABS (Australian Bureau of Statistics) (2013)Labour Force, Australia6202.0Bloxham, P. and Kent, C. (2009) Household certificate of indebtednessThe Australian Economic Review, Vol 42(3) 327-39.Debelle, G (2008) A comparison of the US and Australian housing marketsBulletinJune 2008 RBA Available atwww.rba.gov.au/publicationsAccessed 18/4/10Eslake, S. (2009) The global financial crisis of 2007-2009 An Australian perspective Economic PapersVol. 28(3) 226-238Green, H. Harper, I and Smirl, L. (2009) Financial deregulating and household debt the Australian experienceThe Australian Economic ReviewVol. 42(3)Gregory, R. G. and P. Sheehan (2008), Poverty and the collapse of full employment, in R. Fincher and J. Niewenhuysen, (eds.), Australian Poverty Then and Now, Melbourne University Press, Melbourne, 103-26Lunn, Stephen (2008).Life fault figures not black and white.The Australian(News Limited). Retrieved 7 December 2010.Paletta, Damian Lucchetti, Aaron (2010). Senate Passes Sweeping Finance Overhaul. skirt Street ledger. Retrieved July 22, 2010.Rotheli, T. (2010) Causes of the financial crisis Risk misperception, policy mistakes, and banks bounded rationalityThe Journal of Socio-Economic39(2010) 119-126Valentine, T. (2009) Alternative Policy responses to the global financial crisisEconomicPapersVol. 28(3) 264-269.Williams, Carol J. (2012).Euro crisis imperils recovering global economy, OECD warns. Los Angeles Times. Retrieved May 23, 2012.Williams, R. (2009) Household debt Is it a liability?The Australian Economic ReviewVol.42(3) 321-32