Abstract
This chapter considers the influence of fiscal policy on postwar economic growth and comprises three main parts. The first describes trends in the level and composition of government outlays and receipts and discusses their influence on postwar economic growth in the context of relevant international comparisons. The second considers the effectiveness of fiscal policy in stabilising postwar economic growth and focuses on four episodes, drawing on estimates of the changing stance of fiscal policy over these periods. Finally, the effects of a sustained shift in the stance of fiscal policy, financed through a change in bond sales, on the capital account of the balance of payments are examined by simulating the Australian Medium-Term Simulation (AMPS) model of the Australian economy.
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