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Guest Lecture: Professor Tony MakinAre external deficits a concern?

Page updated 20 Sep 2007

Slides, abstract and paper from Professor Tony Makin's Guest Lecture presented at the Treasury on 02 May 2006.

Professor Tony Makin

Griffith University

Tony Makin is a Professor of Economics at Griffith University, Gold Coast, Australia. In 2003-2004 he was International Consultant Economist with the IMF Institute based in Singapore, is a member of AUSPECC, and has previously served in the Australian federal departments of Finance, Foreign Affairs and Trade, The Treasury and Prime Minister and Cabinet. He has published in numerous academic journals and is author of Global Finance and the Macroeconomy, Palgrave Macmillan, and International Macroeconomics, Pearson.

Abstract

The current account imbalances of many advanced and emerging economies have widened significantly as a proportion of GDP in the wake of the international capital market liberalisation that began in the early 1980’s. As a result, international borrower countries, especially Australia and New Zealand, have experienced sharp rises in external indebtedness. This has concerned policymakers on both sides of the Tasman and, at various times, been a major focus of macroeconomic policy. Misinterpretations of the causes of current account imbalances can lead to misplaced policy reactions that impose large economic and societal costs. Accordingly, this lecture will explain the key factors that determine external deficits and debt, their policy significance, and the macroeconomic benefits and risks they entail.

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