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China's Fiscal Stimulus and the Recession Australia Never Had: Is a Growth Slowdown Now Inevitable?

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  • Creina Day

Abstract

China's timely and well-targeted two-year fiscal stimulus was particularly effective in stimulating growth in Australia's commodity exports. Using a constructed series of export volumes to China, this paper finds that the post-stimulus GDP growth contribution from export volumes to China is significant. Had growth in export volumes to China been commensurate with pre-stimulus rates, Australia would have experienced three consecutive quarters of negative real GDP growth in a technical recession. China's gradual and uniquely revenue-based unwinding of fiscal stimulus reduces the risk to Australia of an imminent growth slowdown.

Suggested Citation

  • Creina Day, 2011. "China's Fiscal Stimulus and the Recession Australia Never Had: Is a Growth Slowdown Now Inevitable?," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(1), pages 23-34.
    • Handle: RePEc:acb:agenda:v:18:y:2011:i:1:p:23-34
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    File URL: http://press-files.anu.edu.au/downloads/press/p115201/pdf/ch035.pdf
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    References listed on IDEAS

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    Cited by:

    1. Nicolaas Groenewold, 2012. "Australia and the GFC: Saved by Astute Fiscal Policy?," Economics Discussion / Working Papers 12-28, The University of Western Australia, Department of Economics.
    2. Day, Creina, 2019. "House prices post-GFC: More household debt for longer," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 91-102.
    3. Nicolaas Groenewold, 2018. "China's ‘New Normal’: How will China's Growth Slowdown Affect Australia's Growth?," Australian Economic Papers, Wiley Blackwell, vol. 57(4), pages 435-445, December.
    4. Makin, Anthony J., 2019. "Lessons for macroeconomic policy from the Global Financial Crisis," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 13-25.
    5. Tony McDonald & Steven Morling, 2011. "The Australian economy and the global downturn, Part 1: Reasons for resilience," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-31, September.
    6. Fardoust, Shahrokh & Lin, Justin Yifu & Luo, Xubei, 2012. "Demystifying China's fiscal stimulus," Policy Research Working Paper Series 6221, The World Bank.
    7. Groenewold, Nicolaas, 2018. "Australia saved from the financial crisis by policy or by exports?," Journal of Policy Modeling, Elsevier, vol. 40(1), pages 118-135.
    8. Nicolaas Groenewold, 2017. "China’s ‘New Normal’: How will China’s growth slowdown affect Australia’s growth?," Economics Discussion / Working Papers 17-19, The University of Western Australia, Department of Economics.
    9. Phan, Tuan, 2016. "Has Monetary Policy Become More Aggressive, But Less Effective Over Time?," MPRA Paper 107200, University Library of Munich, Germany.

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