Why a permanent budget surplus is a poor fiscal model

Economic modelling compares a balanced budget, a permanent surplus and a permanent deficit, and sheds some light on the most effective fiscal setting for Australia.

Last week I showed that Australia’s net government debt to GDP ratio is nothing to panic about when compared to the rest of the world. We’re currently at under 12 per cent, whereas most OECD nations have ratios of 50 per cent and above.

But maybe that’s one reason Australia’s economy is relatively strong.

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