Stimulus spending at home and abroad
by
Fergus Hanson
-
6 February 2009 12:41PM
Following Sam's post on stimulus packages, my main query to the economists out there is why the Australian Government is embarking on such a large stimulus package when the Reserve Bank still has room to cut rates? Each rate cut is effectively a tax cut to millions of Australians. Why wouldn’t we use this option before turning to taxpayer funded handouts that will lump us with a huge debt?
Countries like the US and UK are looking at massive stimulus packages because they have no more room to cut rates and their banks are in a shambles. Australia doesn't have either of those problems. Is this more about the fact the RBA might be in disagreement with the Government on the scale of the crisis?
