| Abstract: | The global recession of 2008–09 brought Keynesian countercyclical budgeting back into vogue – conveniently for governments of the Left such as the incoming Rudd Labor government in Australia. This paper reviews some of the key moments of 20th century macroeconomic policy to assess the reasons and rationale for this revival and concludes that the lessons of those experiences are not always what they seem to be. The paper argues that: (1) Keynesianism is often confused with a narrow focus on fiscal, rather than monetary, policy and an emphasis on full employment at any cost; (2) the return of Keynesianism in Australia has only been made possible by an unusual, if not unprecedented, convergence of conducive conditions; (3) the ‘automatic stabilisers’ significantly reduce the necessity for discretionary fiscal policy; and (4) policy achievements must be seen in the light of Australia's external economy. |
