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Monetary Policy Mistakes and Remedies: An Assessment Following the RBA Review |
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| Authors: | Ross Garnaut David Vines |
| Institution: | 1. The University of Melbourne and The Australian National University;2. Economics Department and Oxford Martin School, University of Oxford
Balliol College, Oxford Centre for Economic Policy Research Garnaut: The University of Melbourne and The Australian National University;3. Vines: Economics Department and Oxford Martin School, University of Oxford;4. Balliol College, Oxford;5. Centre for Economic Policy Research. Corresponding author: Vines, email <6. david.vines@economics.ox.ac.uk>7. . The authors are grateful for helpful discussions with Olivier Blanchard, Gordon de Brouwer, Glyn Davis, Bob Gregory, Stephen Grenville, Renee Fry-McKibbin, Iain Ross and Bob Rowthorn, and with a number of senior officials at the RBA. The authors have also received valuable comments from participants at the Melbourne Economic Forum which was held on 29 May to discuss the RBA Review, and from participants at the Australian Conference of Economists which was held in Brisbane on 12 July. |
| Abstract: | This article responds to the Review of the Reserve Bank of Australia (RBA), which was released on 20 April 2023. We describe the underperformance of the Australian economy over the past decade, and identify the contribution of RBA mistakes. We suggest remedies that would improve prospects for low inflation and unemployment. Returning to general prosperity requires better coordination of monetary, fiscal and macro-prudential policy and of these with other aspects of economic policy-making. We conclude that while the RBA Review makes some valuable suggestions about structure and process at the RBA, it provides little guidance on the content of policy. |
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