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Prime Minister Julia Gillard released the 'Australia in the Asian Century' White Paper in October 2012, describing it as 'a roadmap showing how Australia can be a winner in the Asian Century'. This article provides a review of Australia's progress on engagement with Asia 2 years after the White Paper. It covers the political and performance status of key Asia- related initiatives following the election of the Abbott government. It finds a high level of continuity and support for individual policies and objectives in the White Paper. However, there have been some significant changes in policy, emphasis and approach and emerging areas of underperformance. [ABSTRACT FROM AUTHOR]

The article offers a reflection on the Household, Income and Labour Dynamics in Australia (HILDA) Survey. This panel dataset produced over 300 journal articles, about 30 books and book chapters and multiple public reports and working papers in 10 years. The survey covers the population's labor force, health status, income and family structures. The Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs created the HILDA Survey in 2000.

Comments on the Australian Green Paper entitled 'Restoring Full Employment,' released by the Committee on Employment Opportunities in December 1983. Relationship between unemployment and job vacancies; Concept of training wages; Types of worksharing; Modification of the income test to encourage part-time and casual work.

Assesses the Australian Green Paper entitled 'Restoring Full Employment,' released by the Australian Committee on Employment Opportunities in December 1983. Determinants of the economic growth rate; Relation between economic growth and unemployment rates; Use of the Access Economics Model to predict changes in the unemployment rates.

Examines the key propositions and recommendations of the Australian Green Paper entitled 'Restoring Full Employment,' released by the Committee on Employment Opportunities in December 1993. Expansion in labor market program spendings; Use of wage subsidies to be implemented by public sector job creation programs; Economic growth maximization.

Lists Australian and New Zealand working papers and research reports in the field of economics as of September 1988. Topics, Authors, Manner of obtaining copies.

How large is Australia's fiscal space? Blanchard (2019) shows that as long as the real interest rate R $R$ is below the real growth rate G $G$, a government can sustain a positive primary deficit with a constant (or even declining) ratio of public debt to GDP. In this article, we explain the neutral real interest rate and the reasons for its decline. Then, we discuss the results of a companion paper, Domínguez and Quiggin (2022), in which we quantify the fiscal space for Australia and find that a permanent increase in the primary deficit can be afforded up to reaching a debt to GDP ratio of 79 per cent. Furthermore, this so‐called 'free lunch' in the fiscal space can be expanded if debt is used to finance public investment. [ABSTRACT FROM AUTHOR]

This paper presents an original estimation of the size of the ground‐rent appropriated by competing social subjects in the Australian economy over the long term, and of several economic variables necessary to accomplish that measurement. The paper also assesses the relative importance of ground‐rent in total surplus‐value and the Australian process of capital accumulation, finding that it constitutes a significant portion. Finally, the paper estimates the determinants of the ground‐rent yielded by mining lands used to produced iron ore and mineral coal during the recent 'commodities price boom', stressing the importance of the location factor. [ABSTRACT FROM AUTHOR]

Australia has a long‐standing dependence on foreign investment to make up the difference between domestic saving and investment opportunities. There is, nevertheless, an ongoing debate about the merits or otherwise of inward foreign investment. There has also been a recent tightening of criteria governing foreign investment. The OECD assesses Australia's foreign direct investment regime to be one of the most restrictive in the OECD area, while broader discussions have considered the potential for a decline in Australia's credit rating. This paper uses a dynamic global general equilibrium model—GDyn‐FS—to report on the national and sectoral effects of a decline in the desirability of investing in Australia, relative to other countries. [ABSTRACT FROM AUTHOR]

Three years into the COVID‐19 pandemic, this article considers the longer‐lasting economic impacts on the Australian workforce through a gender lens. Using Australian Bureau of Statistics data, it analyses changes in employment, earnings and educational participation relative to the pre‐pandemic trends that were predicted to have otherwise occurred. Despite women's employment moving back towards pre‐pandemic levels more rapidly than men's, the pandemic also saw a widening of the gender gap in earnings and a larger fall in women's educational participation. This paper highlights the need for ongoing monitoring of labour market indicators through a gender lens to inform more responsive policy design. [ABSTRACT FROM AUTHOR]

In Australia there is limited understanding of the scale and nature of energy hardship or poverty. Energy poverty remains a concept with no clear definition and therefore no clear objectives, targets, metrics for data collection nor institutions to monitor and report on. Europe, in the last decade, has gone from limited public recognition of, and policy action on, energy poverty, to now having sophisticated quantitative measurement and monitoring tools, and institutional governance arrangements that promote transparency and accountability. In this paper, drawing on the European experience, we focus attention upon the measures and indicators of energy poverty and discuss their advantages and disadvantages. We propose institutional options for understanding and tackling these problems in the context of Australia's energy transition. [ABSTRACT FROM AUTHOR]

Our paper examines trends in gender inequalities in unpaid domestic and care work over the short‐ and long‐term in Australia, including assessing the impact of the COVID‐19 lockdowns. We use the concept of time—historical, biographical and transitional—as a framework for our analyses. Drawing on data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, we find wide and continuing gender gaps in unpaid work over the past two decades. We demonstrate that parenthood is a far greater producer and exacerbator of gender inequalities in unpaid domestic and care work than COVID‐19 lockdowns. [ABSTRACT FROM AUTHOR]

Four key issues arising from the Johnson paper relating to ongoing reform of Australia's health sector are discussed. [ABSTRACT FROM AUTHOR]

This paper provides an overview of research into the phenomenon of whether climatic factors, such as temperature and weather‐related disasters, affect the decision to migrate. As an example, we examine migration flows from 198 countries to Australia for the time span from 1980 to 2015. Our results show that temperature does not have a robust, significant effect on migration flows, while weather‐related disasters do significantly affect flows to Australia. [ABSTRACT FROM AUTHOR]

This article discusses recent research on the macroeconomic effects of fiscal policy—the theme of the 2018 edition of the Melbourne Institute Macroeconomic Policy Meeting. We review recent research findings on the effects of fiscal multipliers in normal times, during booms/busts, and in the presence of the zero lower bound. Studies on the effects of fiscal policy in open economy settings as well as contributions on the fiscal‐monetary policy mix are also considered. We conclude by outlining a few research avenues that are particularly relevant from a policy standpoint. [ABSTRACT FROM AUTHOR]

Lists technical papers on social and economic issues in Australia published by the Institute of Applied Economic and Social Research.

Lists several papers and research results in economics featured in the June 1978 issue of the periodical 'The Australian Economic Review.' Health care under voluntary insurance; Incidence of poverty; Index of official economic forecasts and projections; Demand for and supply of professionally-trained social workers; Volunteers in social welfare agencies.

Lists technical papers from the Institute of Applied Economic and Social Research in Australia. Titles and suggested prices.

This paper juxtaposes the policy trend towards a zero inflation rate against the theoretical standard of optimal deflation at the real inter- est rate. It extends an example monetary economy to include a simple form of nominal adjustment costs and calibrates the model with recent evidence on Australian money demand. There is a critical value that the calibrated parameter for menu costs must exceed in order for a zero inflation rate to be optimal. An inflation rate of-2 per cent to 0 per cent is found to be optimal. The quantitative results, of whether inflation-adjustment costs imply a zero inflation rate policy for Australia, are tempered by the abstraction of the model and its sensitivity to parameters. Qualitatively, the paper shows the effects of changes in the adjustment cost function and in the structural parameters. [ABSTRACT FROM AUTHOR]

The article presents information on infrastructure spending and unemployment in Australia. The Australian government's policy package had several components. The first was a recognition that high economic growth was required if significant inroads into unemployment were to be achieved. Given the government's beliefs about the likely outcomes for labour productivity and the labour force participation rate, it was thought that a real growth rate of 4.8 per cent would be required to achieve the target unemployment rate of 5 per cent by 2001. The Green Paper and the subsequent White Paper were pretty vague as to exactly how such a long stretch of high economic growth was to be achieved, placing a lot of faith on microeconomic reform and improving the quality of labour through training reform. However, it was also recognised that high growth by itself was not sufficient, and that a policy of active labour market programs directed at the long-term unemployed and those at high risk' of becoming long-term unemployed would be necessary to reduce long-term unemployment. The Job Compact was an extensive raft of active labour market programs which included an expanded wage subsidy scheme, training programs and case management of the chronically unemployed and which placed an obligation on targeted individuals to participate in the scheme to retain unemployment benefits.

ABSTRACT: This article discusses macroeconomic policies in a low interest rate environment, the central theme of the 2017 edition of the Melbourne Institute Macroeconomic Policy Meeting. After reviewing possible causes of the decline in interest rates observed since the 1990s, we present and discuss some of the challenges that monetary and fiscal policy face in a ‘new normal’ environment characterised by a real natural interest rate close to zero. Proposals by leading researchers on how to operate in such an environment are presented and discussed. We conclude by outlining some research questions that are highly relevant from a policy perspective. [ABSTRACT FROM AUTHOR]

Macroeconomic forecasts and program evaluations of health service interventions are pessimistic about ageing populations, given their low work participation and high demand for social services. We estimate the impact of heart disease on paid work and the value of unpaid non‐market activities of the Australian elderly, using Household, Income and Labour Dynamics in Australia (HILDA) data, finding significant losses in the value of their contributions to adult care and voluntary work. Impacts on non‐market contributions of older women were more significant than for older men. A broader perspective on the value of the contributions made by the elderly is needed to enhance efficiency and (gender) equality. [ABSTRACT FROM AUTHOR]

The COVID‐19 pandemic saw governments around the world suddenly accumulate substantially higher levels of public debt. We consider the level of debt entered into by Australia's federal, state and territory governments and compare this against three metrics for debt sustainability. Using these measures, we find that current and future public debt levels sit within what is regarded as sustainable by scholarly and practitioner opinion. However, we note that recent increases in interest rates will challenge this. We conclude by outlining a range of economic, social and policy challenges arising from the new high public debt environment. [ABSTRACT FROM AUTHOR]

This paper sets up and estimates a structural model of Australia as a small open economy using Bayesian techniques. Unlike other recent studies, the paper shows that a small micro-founded model can capture the open economy dimensions quite well. Specifically, the model attributes a substantial fraction of the volatility of domestic output and inflation to foreign disturbances, close to what is suggested by unrestricted VAR studies. The paper also investigates the effects of various exogenous shocks on the Australian economy. [ABSTRACT FROM AUTHOR]

In this paper we provide a new 31-year time series of the level of protection in the Australian manufacturing sector. The index used is an estimate of the partial equilibrium form of the Trade Restrictiveness Index recently developed by the World Bank. This is the theoretically correct welfare based average of levels of nominal protection. The paper outlines the index and its properties. Some comments are made on the insights gained from the new series and on the record of the Labor and coalition governments in making reforms to industry assistance. [ABSTRACT FROM AUTHOR]

The effects of monetary policies remain always an important topic in macroeconomics. In the literature (closed and open economy), there is no theoretical as well as empirical consensus regarding the effects of monetary policies. In this paper we examine the real effects of inflation in an open economy. Australia is a classic example of a small open economy and is known to exercise inflation targeting. Using quarterly data from Australia and employing vector autoregressive (VAR) analysis, we provide evidence that inflation, both in the short and long run, negatively affects durable and non-durable consumption and investment, and has a positive effect on the current account. Further, we show that consumption of durable goods is more sensitive than the consumption of non-durables during the initial periods following inflationary shocks. [ABSTRACT FROM AUTHOR]

For more than a decade now there has been considerable, often heated, debate over the issue of the parallel importation of sound recordings into Australia. Citing anti-competitive monopolistic distribution, an increasingly integrated global market and the challenges of new technologies, the Australian government recently passed the Copyright Amendment Act (No.2) 1998, which permits the parallel importation of `non-infringing' copies of a sound recording. This paper investigates the economic rationale underpinning this regulatory change and, using a partial equilibrium model, attempts to measure the likely welfare effects on consumers, copyright owners and the nation. In addition the paper examines the likely welfare impact of piracy within the new regulatory framework This paper demonstrates that in a global music market characterised by exclusive territorial licences and price discrimination, the removal of parallel import restrictions by a small net-importer of intellectual property may be welfare enhancing for the nation. This welfare gain is at the expense of largely foreign copyright owners. [ABSTRACT FROM AUTHOR]

This paper makes new projections of government social outlays for Australia. The calculations suggest that government social outlays will increase considerably as a percentage of GDP over the next 50 years; by 7.3 per cent of GDP in the base case. This is a greater increase than that found by previous investigation. Over 60 per cent of this increase will occur between 2011 and 2031, the years when the baby boom generation retires. The major contribution to this increase will have come from increased government outlays on social security. Lower rates of net immigration are shown to yield an even larger increase in the percentage of government social outlays in GDP. The paper also considers the disincentive effect of taxation and the effect of increasing the age of retirement. However, notwithstanding the trends suggested by the projections, the paper argues that there are a number of reasons to be sanguine about the implications of ageing on the share of government outlays in GDP. [ABSTRACT FROM AUTHOR]

This paper examines the potential role for fuel substitution in electricity production in reducing carbon dioxide emissions over a ten-year time horizon. This is achieved by adding fuel substitution to output changes resulting from demand responses arising from a tax on carbon dioxide emissions. A time profile of adjustments is developed. The tax required for Australia to meet a 20 per cent reduction in emissions from 1993 levels is calculated and effects on inequality and social welfare are examined. The paper also examines the potential effect of a subsidy towards the use of low- emission fuels, financed from the carbon tax. A subsidy produces an improvement in emissions abatement and a lower tax required to reach the emissions target. [ABSTRACT FROM AUTHOR]

In the 1980s and 1990s, Australia moved from a protectionist trade policy to very open trade policies. This paper analyses the evolution of these policies in the twenty‐first century: first signing bilateral agreements in the 2000s and then participating in negotiation of mega‐regional agreements (TPP/CPTPP and RCEP). To some extent these shifts have reflected stasis in the World Trade Organisation (WTO) and its inability to make agreements on new areas. Underlying drivers of Australia's beyond‐WTO trade agreements have been the fragmentation of trade along global value chains and the emergence of new trade technologies associated with the spread of the internet. [ABSTRACT FROM AUTHOR]

The article comments on the article "Towards Full Employment," by Peter Dawkins and John Freebairn (hereafter, DF). They have written a very useful and stimulating paper on Australia's most pressing economic problem, unemployment. They present a fairly mainstream analysis of the causes of unemployment, attributing it essentially to two factors, high real wages and inadequate economic growth. They propose a solution aimed at reducing the aggregate rate to around 5 per cent over the next few years, which is to allow a fall in real wages of around 10 per cent. The most significant contribution of the paper lies in DF's recognition of the close nexus between wage outcomes and social security arrangements. This leads them to promote a radically different role in Australia for the tax and transfer system, one designed eventually to lead to negative income taxes. Their essential argument for a negative income tax is that such an approach allows cuts in real wages without increasing the dispersion of incomes; further it is alleged that the policy can be designed to avoid the current high effective marginal tax rates which make the reduction in unemployment more difficult than it need be.

In this paper, we investigate the behaviour of the Australian slate labour markets, focusing on the rote of geographic labour mobility. We find that interstate migration does play an important role in reducing differences in labour market conditions between states, although permanent (or very persistent) differences between state unemployment rates remain. We also find that out-migration from a state resulting front a relative downturn in its labour market occurs slowly and steadily. Most of the migration takes place, on average, within four years, and the process of adjustment is complete tier seven years. [ABSTRACT FROM AUTHOR]

The human capital model is the basis of neoclassical analysis of labour markets, education and economic growth. However, education policy in Australia has been influenced by models based on screening theory and public choice theory which yield the policy implication that reductions in education spending are generally desirable. In this paper, the competing models, and the evidence supporting them, are surveyed. It is concluded that the human capital model is strongly supported by the available evidence. The predictions of screening models are generally not supported by empirical tests, except where they coincide with those of the human capital model. The main evidence supporting the public choice model, derived from the literature on educational production functions, is shown to be deficient. The principal policy conclusion of the paper is that the negative effects of recent cuts in education spending will outweigh any benefits achieved through reductions in public debt. [ABSTRACT FROM AUTHOR]

The article presents information on path to full employment in relation to Australia. Employment arises because there is a lack of collective will. It does not arise because real wages are too high or aggregate demand too low. These are only proximate causes, if causes at all. The lack of collective will has been the principal casualty of the influence of rationalism. In this paper the proximate cause of unemployment is shown to be a persistent deficiency of aggregate demand. But the underlying cause is that the rise of free market ideology has meant that people are no longer prepared to bear some costs themselves to ensure others have employment. The only way people will return to full employment is if the costs and benefits of economic activity are shared. The public sector must be the vehicle to restore the collective will. In this paper, it is argued that the solution to persistent unemployment is for the Government to act as a Buffer Stock Employer, plus the reintroduction of incomes policy. Further deregulation of the wages system cannot be justified.

Poverty and inequality measurement in Australia has typically excluded the self-employed because of concerns about a weak relationship between their measured incomes and their standard of living. At the same time, however, families containing self-employed individuals receive substantial income support. Is this support well targeted? This paper compares the living standards of low income self-employed and employee families using data from the ABS 1993-94 House- hold Expenditure Survey. The use of expenditure data for the measurement of living standards poses particular methodological problems, for which some new solutions are proposed. The paper concludes that the average living standards of low income self- employed families and of self-employed families receiving additional family payments are higher than those of comparable employee families. On the other hand, a greater proportion of self-employed families have low consumption levels. [ABSTRACT FROM AUTHOR]

We outline the case for Australia to adopt a 'New Regional Compact' focusing on working with its Pacific Island neighbours and Timor‐Leste through improved labour mobility and skilling as a complement to foreign aid and development assistance. We examine the distinctive context and evidence for this approach, related policy settings and possible ways forward. Embedded in this shift is a necessary move from a short‐term focus on temporary migration, skills shortage, and limited‐term aid programs, to long‐term foundational policies that can be a permanent feature of Australia's policy ecosystem and that of its neighbours. [ABSTRACT FROM AUTHOR]

Inflation expectations are typically considered a pivotal and causal driver of inflation dynamics over which central banks have a strong influence. Given this influence, it is important for central banks to understand how expectations are formed and how their operations influence these expectations. We describe the various ways inflation expectations are measured and used by the Reserve Bank of Australia (RBA), and then review the evidence on how Australians form their expectations. In contrast to what is assumed in standard macroeconomic models, expectations are generally not formed rationally or with full information. We close by highlighting what these findings imply for the conduct of monetary policy. [ABSTRACT FROM AUTHOR]

The analysis in this paper presents evidence on the behaviour of tenants in public housing in Australia. Using a unique administrative dataset for West Australia, we identify the nature of spells in public housing and the determinants of the length of those spells. Our results indicate that lone parents and single individuals experience longer spells in public housing compared with couple households. We find that an increase in the market rent of a property in the order of $100 per month reduces the hazard out of public housing by between 17 per cent (lone parents) and 10 per cent (couples). [ABSTRACT FROM AUTHOR]

This paper examines the technical efficiency of Australian banks during the post-Wallis period (1997–2005). The results based on data envelopment analysis reveal that the extent of technical efficiency varies across the banks and over the years. The National Australia Bank, Commonwealth Bank and Macquarie Bank are found to be technically efficient, whereas Adelaide Bank, the Bank of Queensland and Westpac Bank are found to be prominently inefficient. Technical efficiency is the lowest among small banks and has declined over time largely due to deterioration in scale efficiency. Medium-sized banks have outperformed both the small and large banks in terms of efficiency improvements. Some insights into the debate over the removal of the ‘four-pillar’ policy are provided. [ABSTRACT FROM AUTHOR]

Like their counterparts elsewhere, more young Australians than ever are delaying the move to establish residential independence from their parents. This paper reviews the developing economics literature surrounding young people's decisions to continue living in their parents' homes in order to begin to assess the causes and consequences of this decision. In particular, co-residence with parents appears to be an important form of intergenerational support for young adults. It is important to understand the extent to which young people rely on this form of support as they complete their education, enter the labour market and establish themselves as independent adults. Specific attention is paid to the ways in which Australian income support, education and housing policies may influence these patterns. [ABSTRACT FROM AUTHOR]

This article examines the prices of housing in Australia and recommends several policy options. This paper draws on a collaborative research program that examined Australia's housing affordability problem. The author contends that the problem is not due to current factors but has arisen from many decades of policy. She also states that renters in housing stress is a significant problem and needs to be addressed through a reorientation of government policy. It should encourage increasing the supply of rental housing.

This paper analyses data from the University of Western Australia (UWA) Graduate Destination Survey linked to information from the University's Student Records System to explore the determinants of graduates' starting salaries over the years 2002 to 2004. While the details examined also include age, gender, language spoken at home, country of birth, disability status and high school attended, most emphasis is placed on the impact on starting salaries of students' academic performance and their field of study. The analyses show that the main determinant of graduates' starting salaries is the weighted average mark they achieve at university. The salary differentials associated with higher marks in the Australian labour market appear greater than those reported in similar studies of the US and the UK labour markets. Science graduates are shown to have relatively low starting salaries, casting a shadow over recent suggestions that the supply of this group be increased through lower fee regimes. [ABSTRACT FROM AUTHOR]

This paper examines the ability of standard economic factors to explain the growth of real house prices in Australia's capital cities. Dynamic models are estimated for each city with the objective of identifying the major drivers of house price growth rates. The variable mortgage rate is found to be an important influence on growth rates in all eight capital cities. However, the size of the mortgage rate effect can differ substantially between cities. For example a 25 basis point rise in the mortgage rate reduces the long-run quarterly growth rate of real house prices by about 1 per cent in Sydney compared with only 0.4 per cent in Adelaide. The effects of other economic variables are less systematic, significantly affecting the growth rate of capital gains in some cities but not in others. Nevertheless, for most Australian cities economic factors are found to explain around 40 to 60 per cent of the variation in the growth rate of house prices. [ABSTRACT FROM AUTHOR]

The article introduces several papers in the issue that discuss the problem of education and skill mismatches in the Australian labor market. The problem is not unique to Australia, as evidence exists that significant mismatching of jobs and workers exists in the U.S. and Europe. Persons with educational levels exceeding what their jobs demand earn less than similarly educated but better-matched employees. Conversely, undereducated people enjoy a small wage premium. Overeducation can plague a person for years. Training can be useful in boosting the earnings of both undereducated and overeducated employees. Further data and studies are needed to better understand the issue.

This paper looks at facts, issues and debates surrounding the potential impact of immigration on the Australian population. Some of the topics looked at are the orthodox view of aging and immigration, immigration composition, immigration numbers versus rates, dependency measurement, dependency costs, and population policy and research. The paper concludes that immigration has a significant impact on social expenditures in Australia.

This paper reports on the results of the first year of a four-year study of the relationship between indigenous' people and the welfare system in two communities: Kuranda in North Queensland and Yuendumu in Central Australia. The work has been conducted by a group of researchers at the Centre for Aboriginal Economic Policy Research at the Australian National University and partially funded by the Commonwealth Department of Family and Community Services. The broad objective of the research has been to document the nature and extent of the relationship between indigenous people and the welfare system and to draw out the implications for family welfare policy and for the delivery of welfare services. A fuller discussion of the methodology and results is available in the monograph "Indigenous Families and the Welfare System: Two Community Case Studies" edited by Diane Smith.

This paper explores the effects of a goods and services tax on the degree of competition in an oligopolistic industry and identifies a new mechanism through which the tax influences product market competition. The analysis focuses upon the effects of the tax in a concentrated industry and it is demonstrated that there exist circumstances under which the tax may promote competition by rendering tacit collusion more difficult. [ABSTRACT FROM AUTHOR]

This paper considers the effects of tariff cuts in the intermediate inputs market Traditional trade theories predict that upstream industries would contract and downstream industries would expand. In contrast, new trade theories show that trade liberalisation of the intermediate inputs market may expand both upstream and downstream industries. [ABSTRACT FROM AUTHOR]

This article seeks to demonstrate clearly that while the exact assignment of property rights makes no difference to the achievement of allocative efficiency, it does affect the welfare of the parties involved. Understanding the welfare changes highlights an important policy insight to students of neoclassical economics who are taught that there is a trade-off between efficiency and welfare (equity). The article also shows that since the efficiency goal is unaffected by who is assigned the property rights, the assignment exercise can be used to alter welfare in some "desired" direction without compromising efficiency-an exciting policy opportunity that comes only rarely in economics! Finally, the article discusses a case example where a solution to an externality was found, despite the absence of Coase's conditions of clear property rights and low transaction costs, and Pigou's idea of public sector intervention. The case study discussed in this article shows how grassroots movements can fill the vacuum created by an impotent public sector in addressing a situation of extensive negative externality.

The article comments on the article "The Path to Full Employment," by William F. Mitchell and Martin J. Watts. In their paper, Mitchell and Watts (referred to from here on as MW) claim that the proximate' cause of high unemployment in most economies has been a persistent deficiency of aggregate demand', which in turn has been the result of the application of excessively restrictive fiscal and monetary policy over the last two decades. While the paper ranges over a number of related issues and themes, in the short space allocated to this commentary, the author concentrates on the merits and drawbacks of their Buffer Stock Employer (BSE) scheme, which MW claim will solve the unemployment problem without creating significant inflationary pressures. The first point that can be made is that the BSE model is nothing new indeed it is nothing more than a public sector job creation program, similar in purpose to the Regional Employment Development Scheme of the 1970s, the Community Employment Program of the 1980s, and the New Work Opportunities component of the Job Compact. The main difference is that the scheme is to be a permanent feature of labour market assistance rather than a temporary measure.