Canberra ACT 2600, Australia
Institutional Affiliation: Australian Treasury
NBER Working Papers and Publications
|October 2007||Australian Government Balance Sheet Management|
with Jason McDonald, Amanda Sayegh
in Fiscal Policy and Management in East Asia, Takatoshi Ito and Andrew K. Rose, editors
|June 2006||Australian Government Balance Sheet Management|
with Jason McDonald, 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);...
Published: Ito, Takatoshi and Andrew K. Rose (eds.) Fiscal Policy and Management in East Asia, NBER-East Asia Seminar on Economics series, vol 16. Chicago and London: University of Chicago Press, 2007.