Treasury recently consulted on how the government should manage fiscal policy (i.e. government spending) through economic shocks and business cycles.
Positive Money used this consultation as an opportunity to promote the use of Direct Monetary Financing as part of a mix of tools that the Government has at its disposal, pointing to the numerous benefits it offers.
At the same time, we pointed out the limitations of the current approach to monetary policy via an independent Reserve Bank using a very narrow range of tools and suggested that adding some monetary financing could provide better outcomes for both fiscal and monetary policy.
Our full submission is below.
The Treasury consultation document can be found here.