Fiscal policy in extraordinary times: A perspective from Australia’s experience in the global recession

Abstract

Abstract Australia is almost unique in the developed world for the fulsomeness of its Keynesian fiscal stimulus during the global recession of 2008–2009 and for the subsequent strength of its macroeconomic performance. This paper draws some lessons for discretionary fiscal policy from the Australian experience during that period. When the crisis hit, policymakers around world were faced with three practical fiscal questions: when to stimulate, what to stimulate and how to withdraw stimulus? This paper describes the Australian government’s answers to these questions and what we learned along the way.