RBA Annual Conference – 1992 OECD Country Experiences with Disinflation

Table 4: Policies and Disinflation1
Fiscal policy2 Monetary policy Exchange rate policy Incomes policy
Actual Noncyclical Primary Nominal Real3 Differential4 Arrangement5 Nominal6 Real7 General Disindexation
Change in balances % of GNP/GDP Change in bond rates (Change in eff. rates) 
United States −1.3 −1.1 0.5 0.6   −4.0 1.0 2.1 Flexible −10.0 – −25.0 No No
Japan 6.8 6.1 4.5 5.6   −1.5 2.0 0.5 – 61.0 – 34.5 No No
Germany 0.8 4.3 2.0 1.1   −0.6 2.1 1.9 ERM 27.0 (35.0) 12.5 No No
France −0.7 1.4 0.3 1.1   −4.6 4.7 −1.0 ERM −13.2 (−12.5) −7.0 Yes Yes
Italy −0.6 1.8 −2.4 4.0   −5.5 6.8 0.0 ERM −20.5 (−20.0) 26.5 No Yes
United Kingdom 2.3 2.1 2.0 2.3   −2.2 5.4 −2.5 Flexible −20.0 – −7.5 No No
Canada −1.7 −2.3 1.9 2.6   −3.0 2.5 −0.5 Flexible −1.5 – 10.2 No No
Austria −0.4 −0.5 −0.6 1.6   −1.2 2.1 1.0 DM 16.8 – −5.0 Yes No
Belgium 5.6 7.9 3.2 9.9   −3.0 −0.8 2.2 ERM −4.5 (−4.5) −20.5 Yes Yes
Denmark 3.5 4.2 4.6 5.8   −8.5 −0.7 −2.5 ERM 2.5 (−1.0) 14.0 Yes Yes
Ireland 10.4 14.9 2.3 12.6   −6.0 8.0 −1.0 ERM −4.5 (−2.0) −27.5 Yes No
Netherlands −0.6 1.9 0.5 2.2   −1.8 1.6 0.7 ERM 20.5 (20.0) −9.0 No No
New Zealand8 12.0 n.a. n.a. 13.29   −0.5 9.8 −3.0 Flexible −35.5 – −1.5 Yes No
Norway −3.0 −5.3 −7.5 −6.4   −0.5 7.9 −1.5 Basket −15.0 – 0.0 Yes No
Sweden 8.6 6.9 8.4 9.4   0.9 7.0 0.3 Basket −23.5 – 1.0 No No
Australia 1.5 1.8 2.3 3.1   0.4 3.8 −0.5 Flexible −39.5 – −13.5 Yes No
1. Unless otherwise indicated all changes refer to the period 1980/81–1990.
2. All figures refer to general government; + (−) indicates smaller (larger) deficit or larger (smaller) surplus. The second column is the cumulative change (1982–89) in the cyclically adjusted budget balance and the third column is the inflation-corrected change in the fiscal impact index (1981–89), assuming forward-looking behaviour by households; see Chouraqui et al. (1990), Tables 4, 13 and 14.
3. Nominal rate less current and lagged change (unweighted average) in consumer prices.
4. Nominal bond rate less representative short-term rate.
5. Refers to the period in general and does not include recent changes in ERM participation.
6. Nominal effective exchange rate against 21 most important trading partners: + (-) denotes appreciation (depreciation). Figures in brackets denote change vis-a-vis ERM partners.
7. Deflated by unit labour costs; + (−) indicates a deterioration (improvement in competitiveness).
8. Central government, fiscal year (April to April).
9. 1982–88.