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Author's Name: Guay Lim
Date: Thu 07 May 2020

Guay Lim

Professor Guay Lim

Guay Lim is a Professorial Research Fellow at the Melbourne Institute: Applied Economics and Social Research and an Adjunct Professor at the Department of Economics, University of Melbourne. Her research interest is in the application of macroeconomic forecasting and policy models to obtain insights about macroeconomic issues particularly around inclusive growth and business cycle stabilisation. Her papers have been published in major international journals like the Journal of International Economics, Journal of Economic Dynamics and Control, Journal of Banking and Finance, Journal of Business and Economic Statistics, Journal of Applied Econometrics. She is a member of the CAMA Shadow Board and the Advisory Board of the Australasian Macroeconomics Society. She has been a Visiting Research Fellow at the International Monetary Fund and the European Central Bank. Guay is the head of the Macroeconomics Program at the Melbourne Institute responsible for the production of various indicators of activity about the Australian economy.

Subject Area Expertise

Macroeconomics,  Small Open Economies, Macro-econometrics.

Website

Company website: https://www.melbourneeconomicforum.com.au/panelists/guay-lim


Responses (30)


Economists eye costs of a failed energy transition

Poll 67

Poll finds support for aligning net zero, reliability and price,

Peter Martin

 

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WHAT MATTERS MOST: 1. Ensuring the reliability of power supply 2. Minimising the total cost of power generation, power distribution and retailing PER CENT OF GENERATION BY 2040: Coal: 20 Gas: 20 Renewables: 40 Nuclear: 20 HOW TO GET THERE: Investment subsidies for preferred forms of energy generation/transmission, Production tax concessions for preferred forms of energy generation, Carbon pricing through a cap and trade scheme


Trump's impact on the Australian Economy

Poll 66

Top economists say Trump’s policies will hit Australian economic growth and push up inflation and interest rates in the US.

 

Higher US inflation; Higher US interest rates; Slower progress towards global net zero emissions


Housing Reform

Poll 65

Panellists are unanimous in believing Australia’s housing market is in crisis.

Offered a choice of 14 measures identified by the Economic Society of Australia as likely to restrain prices for buyers and renters, none of the 49 leading economists polled picked: “do nothing, the market will determine appropriate prices”.

 

.

Rental Affordability

Replace stamp duty with a broadly based land tax that includes the family homes, Provide more public housing, Ease planning restrictions


Budget 2024

Poll 64

Panelists were asked to comment on two questions: 

Is the budget likely to achieve its aim of getting inflation back within the RBA target band by the end of this year and back to 2.75% by mid next year?

And

On May 14, the government delivered a budget designed, in the Treasurer's words, to "focus on fighting inflation in the near term and then growth in the medium term " - What grade would you give the budget, given that objective? A, B, C, D, E or F

Wes Mountain/The Conversation, CC BY-ND https://creativecommons.org/licenses/by-nd/4.0/

 

NO The consensus view is that consumer price inflation is more likely to be close to, but still above, the top of the target band which is 3%. The underlying causes of inflationary pressures ? a tight labour market, excess demand, and high profits ? have been quite persistent.

B

The focus of the budget is on the near to medium term and in this regard it has prioritized issues that matter to many Australians, easing cost-of-living pressures, building more homes, paying attention to health care and education and skills and promoting inclusive growth. The weak part of the budget is that it is unclear whether the planned investments will yield rates of return that exceed the real growth rate and thereby lift the standard of living. A more balanced approach would also have considered the problem of a structural deficit.


Western Australian GST deal

Poll 63

April Poll - panellists were asked about the GST deal with Western Australia.  The following two questions were posed: 

"Is the long-standing arrangement broadly the best method of distributing the nationally-collected GST revenue?" and "Should the 2018 changes be kept or scrapped?"

 

NO -

Kept


Transition to net zero - ape the US Inflation Reduction Act?

Poll 62

Panellists were asked "Which of the options set out below best describes the kind of approach the Australian government should take to the US Inflation Reduction Act? (Pick 1)"

 

The payoff to clean-energy innovation has increased, To support homegrown emerging green technologies

Provide more grants to innovative firms across the entire economy


Reintroduction of the Carbon Price

Poll 61

Worried economists call for a carbon price, a tax on coal exports, and ‘green tariffs’ to get Australia on the path to net zero

 

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism| Expedite building new transmission lines to connect renewable energy


Budget 2023

Poll 59

Our panellists were asked the following 2023 budget question: "On May 9, the government delivered a budget designed, in the Treasurer's words, to strike a balance between relief, repair and restraint'.  What grade would you give the budget, given that objective: A, B, C, D, E or F?"

Wes Mountain/The Conversation, CC BY-ND - https://creativecommons.org/licenses/by-nd/4.0/

 

Overall rating: B - Keeping inflationary pressures in check: B

B

INFLATION COMMENTS: In a high-inflation, low-growth economy, with tightening monetary policy, it is desirable for fiscal policy to adopt a neutral stance. Stimulatory budget initiatives could fuel inflation, while contractionary measures could push growth lower and the economy into a recession. On balance, the small budget surplus suggests relatively neutral macro effects.


How economists would raise $20 billion per year

Poll 58

When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.

Photo credit by Joshua Hoehne on Unsplash

 

Efficiency picks: Broaden the set of goods and services captured by the GST Increase the GST Equity picks: Tax windfall profits Introduce inheritance taxes


Leading economists back Federal Government action to curb rising gas and electricity prices

Poll 57

Australia’s top economists have overwhelmingly endorsed intervention to restrain gas and electricity prices, with only three of the 47 leading economists surveyed believing the best thing the government can do is to leave things to the market.

Photo credit: Wes Mountain/The Conversation, CC BY-ND

 

.

Targeted subsidies for low income consumers


Is education or immigration the answer to our skills shortage? We asked 50 economists

Poll 56

Investing in Australians’ education is far more important than immigration in resolving the nation’s skills shortages, according to leading economists surveyed in the lead-up to this week’s jobs and skills summit.

The 50 top Australian economists polled by the Economic Society of Australia and The Conversation are recognised by their peers as leaders in their fields, including economic modelling, labour markets and public policy.

Wes Mountain/The Conversation, CC BY-ND

 

Workforce participation Broader reforms to promote productivity Migration policy

Workforce participation I think a framework around the 3Ps - population, productivity and participation - would help keep the summit focussed on the big picture. Many of the priorities listed (such as green jobs, care jobs, digital jobs) are specific suggestions about building the skills base, enhancing capacity and creating opportunities.


'It’s important not to overreact’: Australia’s top economists on how to fix high inflation

Poll 55

Australia’s top economists are divided about how to tackle ballooning inflation of 6.1% that’s forecast to climb to a three-decade high of 7.75% by the end of the year.

Wes Mountain/The Conversation, CC BY-ND

 

.

3%

There are some signs that the interest rate hikes are dampening demand which would help reduce inflationary pressures. It is not clear that other government actions at this time would help. For example, government actions to boost the labour force participation rate (while worthwhile in their own right), are unlikely to bring down the inflation rate as there is little evidence current inflationary pressures are coming from tight labour markets. It is also unclear that the high inflation rate is due to a fundamental mismatch of demand and supply factors; in which case, actions that could change underlying behaviour may be counter-productive.


Prioritising issues for the incoming Government

Poll 54

Panellists were asked: 

"From this list, please pick the three issues you think will be the most important for the incoming government and should be the most important in the election".

Wes Mountain/The Conversation, CC BY-ND

 

.


Intake of permanent migrants

Poll 52

"What do you think the intake of permanent migrants should be in coming years"

Australia’s leading economists have overwhelmingly endorsed a return to the highest immigration intake on record, saying Australia should aim for at least 190,000 migrants per year as it opens its borders, up from the target of 160,000 per year set ahead of COVID.

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

.

190,000 is about right


Top Economists see no prolonged high inflation, no rate hike next year (Q4)

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 4

"Following the next Federal election, the incoming Federal Government should commission an independent Review of the Reserve Bank of Australia."

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Agree


Top Economists see no prolonged high inflation, no rate hike next year (Q3)

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 3 

"The Reserve Bank has, over the past 5 years, effectively used the tools available to it to achieve its goals of "maintaining the stability of the currency, ensuring full employment and furthering the 'economic prosperity and welfare of the people of Australia'."

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Agree

9


Top Economists see no prolonged high inflation, no rate hike next year (Q2)

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 2

"When do you expect the Reserve Bank of Australia to next lift its cash rate?"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

.

8

2023


Top Economists see no prolonged high inflation, no rate hike next year (Q1)

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 1

"The current combination of Australian fiscal and monetary policy poses a serious risk of prolonged above-target inflation."

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Disagree

7

It is still not clear that actual inflation will remain "sustainably within the 2?3% target range? in 2022. There are signs of an economic recovery but activity is still adapting to a "new normal" and growth in wages is still expected to remain modest.


Australia’s top economists back carbon price, say benefits of net-zero outweigh cost

Poll 50

Ahead of November’s Glasgow climate talks, our panellists were asked

"Australia would likely benefit overall from the national economy transitioning to net-zero emissions by 2050"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain


Promoting vaccination uptake in Australia

Poll 49

"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Vaccine passports for higher-risk settings (eg. flights, restaurants, major events);National advertising campaigns;Mandatory vaccination for higher risk occupations


Policies to deliver higher wage growth

Poll 48

Our panellists were asked

"Higher wages growth is now a top priority of the RBA in its efforts to sustain stronger economic growth. Please identify the three of these government policies you think would best help deliver higher wages growth".  

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

.

Measures to boost productivity growth;Measures to boost business investment;Maintaining high governm

Policies directed at increasing output per unit of labour are likely to sustain long-term growth in wages. Measures to boost productivity growth, measures to boost business investment, and measures to increase government spending to support physical and human capital accumulation are labour augmenting changes and likely to yield stronger economic growth. What exactly these measures should be, though, remains to be discussed.


Transition to electric cars

Poll 47

This month, our panellists were asked whether Australia should take action to speed the transition to electric cars.

"As part of efforts to reduce carbon emissions, Australian governments should take action to accelerate the take up, or take no action to accelerate the take up of electric cars"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Remove the luxury car tax from all-electric cars, Subsidise public charging points for electric cars

6


Does the budget rebuild our economy and create jobs?

Poll 43

"On 6 October, the Government delivered a budget designed, in the Treasurer's words, to 'rebuild our economy and create jobs'.  What grade would you give the budget given the objective?  A, B, C, D, E, F"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

A

Fiscal policy has to be more active in stimulating the economic recovery in an environment where monetary policy is operating at close to the zero-lower bound. This budget did that by including a range of fiscal stimulus measures to support jobs and to promote economic growth.


Top economists want JobSeeker boosted by $100+ per week and tied to wages

Poll 44

"Ahead of a decision about any permanent increase expected early next year, The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle."

Photo credit : Wes Mountain/The Conversation, CC BY-ND

 

Be indexed in line with wages


The Federal Budget May 2021

Poll 46

"On May 11, the government delivered a budget designed, in the Treasurer's words, to 'secure Australia's economic recovery and build for the future'.  What grade would you give the budget given that objective, A, B, C, D, E, F?"

Photo credit Wes Mountain/The Conversation, CC BY-ND

 

.

B

The Budget contains spending initiatives to consolidate the economic recovery underway, but it is unclear what strategies are in place to sustain inclusive economic growth.


October Budget 2020 - preferred four programs

Poll 42 

"The October budget will see the government announce additional policies to support recovery.  Please nominate the four programs you think would be the most effective (for an intervention of a given size) over the next two years"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

Bring forward legislated personal income tax cuts, Corporate tax cuts, Permanently boosting JobSeeker (Newstart) beyond December 31, 2020, Infrastructure projects


The legislated increases in compulsory super contributions should...

Poll 41

"The legislated increases in compulsory super contributions, which are set to climb from 9.5% of wages to 12% over the next five years should...."

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

Be deferred

7


Government Debt during the COVID19 Crisis

Poll 40

"Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

Agree

8

The public debt will be sustainable if the fiscal support yields a growth in income which exceeds the cost of funds. Since interest rates are currently very low, the burden of the debt is unlikely to be high.


Wage freeze for economic recovery

Poll 39

"A freeze in the minimum wage will support Australia's economic recovery"

Photo credit: Wes Mountain/The ConversationCC BY-ND 

 

Agree

8

A wages' pause (especially in an environment of low price inflation) would contain labour costs, allow businesses to save/create jobs, encourage employment and support the process of economic recovery. While a freeze in the minimum wage will likely disadvantage low income earners, it can be mitigated by other direct fiscal supports.


Social Distancing Measures, May 2020

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

 

Uncertain

8

Whether the benefits are likely to exceed the costs is uncertain as we are talking about concepts that are hard to measure/quantify. Are direct fiscal payments costs and/or benefits? The evaluation will also depend on how long social distancing measures will be in place, the severity/strictness of the measures as well as the nature of financial and non-financial supports. The prevalence of testing and contact tracing will also be important to the analysis.