NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Jason McDonald

Australian Treasury

E-Mail: jmcdonald@treasury.gov.au

NBER Working Papers and Publications

October 2007Australian Government Balance Sheet Management
with Wilson Au-Yeung, Amanda Sayegh
in Fiscal Policy and Management in East Asia, NBER-EASE, Volume 16, Takatoshi Ito and Andrew K. Rose, editors
Comment on "Dealing with Contingent Liabilities: The Philippines"
in Fiscal Policy and Management in East Asia, NBER-EASE, Volume 16, Takatoshi Ito and Andrew K. Rose, editors
June 2006Australian Government Balance Sheet Management
with Wilson Au-Yeung, Amanda Sayegh: w12302
Since almost eliminating net debt, the Australian Government%u2019s attention has turned to the financing of broader balance sheet liabilities, such as public sector superannuation. Australia will be developing a significant financial asset portfolio in the %u2018Future Fund%u2019 to smooth the financing of expenses through time. This raises the significant policy question of how best to manage the government balance sheet to reduce risk. This paper provides a framework for optimal balance sheet management. The major conclusions are that: %u2013 fiscal sustainability depends on both the expected path of future taxation and the risks around that path; %u2013 optimal balance sheet management requires knowledge of how risks affect the balance sheet (and therefore volatility in tax rates);...

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