'A quite unprecedented achievement'?: Responding to the 1950s terms of trade boom

Anthony Goldbloom; John HAWKINS; Steven Kennedy

'A quite unprecedented achievement'? Responding to the 1950s terms of trade boom

Anthony Goldbloom, John HAWKINS, Steven Kennedy

Research output: Contribution to conference (non-published works) › Paper

952 Downloads (Pure)

Abstract

The boom in wool prices in the 1950s led to the largest increase in the terms of trade in Australia’s history. This occurred at a time when the Australian economy was near full employment and already facing demand pressures. Not surprisingly, inflation surged in response to these circumstances. The delayed policy responses were the 1951-52 ‘horror budget’, somewhat tighter monetary policy and a move away from wage indexation. These interventions, combined with a fall in the wool price, quickly snuffed out the upsurge in inflation, with only a mild recession. The Treasurer of the day regarded this as ‘a quite unprecedented achievement’.
The terms of trade are currently at their highest level since the early 1950s. Changes to macro and micro policy frameworks mean that both the distribution of the gains and the macroeconomic implications of the current high terms of trade are quite different to those of the 1950s boom. But there may still be useful lessons to be derived from examining the 1950s experience.

Original language	English
Pages	1-37
Number of pages	37
Publication status	Published - Oct 2007
Externally published	Yes
Event	University of Melbourne Economic History Workshop - University of Melbourne, Melbourne, Australia Duration: 1 Oct 2007 → 1 Oct 2007

Workshop

Workshop	University of Melbourne Economic History Workshop
Country/Territory	Australia
City	Melbourne
Period	1/10/07 → 1/10/07

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

ArticleSubmitted manuscript, 275 KB

https://www.academia.edu/16965865/A_quite_unprecedented_achievement_Responding_to_the_1950s_terms_of_trade_boom

Cite this

@conference{4c3ea7ef99724558a85f9e1012ee832d,

title = "'A quite unprecedented achievement'?: Responding to the 1950s terms of trade boom",

abstract = "The boom in wool prices in the 1950s led to the largest increase in the terms of trade in Australia{\textquoteright}s history. This occurred at a time when the Australian economy was near full employment and already facing demand pressures. Not surprisingly, inflation surged in response to these circumstances. The delayed policy responses were the 1951-52 {\textquoteleft}horror budget{\textquoteright}, somewhat tighter monetary policy and a move away from wage indexation. These interventions, combined with a fall in the wool price, quickly snuffed out the upsurge in inflation, with only a mild recession. The Treasurer of the day regarded this as {\textquoteleft}a quite unprecedented achievement{\textquoteright}. The terms of trade are currently at their highest level since the early 1950s. Changes to macro and micro policy frameworks mean that both the distribution of the gains and the macroeconomic implications of the current high terms of trade are quite different to those of the 1950s boom. But there may still be useful lessons to be derived from examining the 1950s experience. ",

keywords = "economic history, terms of trade, Korean war boom",

author = "Anthony Goldbloom and John HAWKINS and Steven Kennedy",

year = "2007",

month = oct,

language = "English",

pages = "1--37",

note = "University of Melbourne Economic History Workshop ; Conference date: 01-10-2007 Through 01-10-2007",

}

TY - CONF

T1 - 'A quite unprecedented achievement'?

T2 - University of Melbourne Economic History Workshop

AU - Goldbloom, Anthony

AU - HAWKINS, John

AU - Kennedy, Steven

PY - 2007/10

Y1 - 2007/10

N2 - The boom in wool prices in the 1950s led to the largest increase in the terms of trade in Australia’s history. This occurred at a time when the Australian economy was near full employment and already facing demand pressures. Not surprisingly, inflation surged in response to these circumstances. The delayed policy responses were the 1951-52 ‘horror budget’, somewhat tighter monetary policy and a move away from wage indexation. These interventions, combined with a fall in the wool price, quickly snuffed out the upsurge in inflation, with only a mild recession. The Treasurer of the day regarded this as ‘a quite unprecedented achievement’. The terms of trade are currently at their highest level since the early 1950s. Changes to macro and micro policy frameworks mean that both the distribution of the gains and the macroeconomic implications of the current high terms of trade are quite different to those of the 1950s boom. But there may still be useful lessons to be derived from examining the 1950s experience.

AB - The boom in wool prices in the 1950s led to the largest increase in the terms of trade in Australia’s history. This occurred at a time when the Australian economy was near full employment and already facing demand pressures. Not surprisingly, inflation surged in response to these circumstances. The delayed policy responses were the 1951-52 ‘horror budget’, somewhat tighter monetary policy and a move away from wage indexation. These interventions, combined with a fall in the wool price, quickly snuffed out the upsurge in inflation, with only a mild recession. The Treasurer of the day regarded this as ‘a quite unprecedented achievement’. The terms of trade are currently at their highest level since the early 1950s. Changes to macro and micro policy frameworks mean that both the distribution of the gains and the macroeconomic implications of the current high terms of trade are quite different to those of the 1950s boom. But there may still be useful lessons to be derived from examining the 1950s experience.

KW - economic history

KW - terms of trade

KW - Korean war boom

M3 - Paper

SP - 1

EP - 37

Y2 - 1 October 2007 through 1 October 2007