'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

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 languageEnglish
Pages1-37
Number of pages37
Publication statusPublished - Oct 2007
Externally publishedYes
EventUniversity of Melbourne Economic History Workshop - University of Melbourne, Melbourne, Australia
Duration: 1 Oct 20071 Oct 2007

Workshop

WorkshopUniversity of Melbourne Economic History Workshop
CountryAustralia
CityMelbourne
Period1/10/071/10/07

Fingerprint

Terms of trade
Inflation
Wool
Recession
Full employment
Wage indexation
Policy responses
Macroeconomics
Monetary policy

Cite this

Goldbloom, A., HAWKINS, J., & Kennedy, S. (2007). 'A quite unprecedented achievement'? Responding to the 1950s terms of trade boom. 1-37. Paper presented at University of Melbourne Economic History Workshop, Melbourne, Australia.
Goldbloom, Anthony ; HAWKINS, John ; Kennedy, Steven. / 'A quite unprecedented achievement'? Responding to the 1950s terms of trade boom. Paper presented at University of Melbourne Economic History Workshop, Melbourne, Australia.37 p.
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Goldbloom, A, HAWKINS, J & Kennedy, S 2007, ''A quite unprecedented achievement'? Responding to the 1950s terms of trade boom' Paper presented at University of Melbourne Economic History Workshop, Melbourne, Australia, 1/10/07 - 1/10/07, pp. 1-37.

'A quite unprecedented achievement'? Responding to the 1950s terms of trade boom. / Goldbloom, Anthony; HAWKINS, John; Kennedy, Steven.

2007. 1-37 Paper presented at University of Melbourne Economic History Workshop, Melbourne, Australia.

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

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Goldbloom A, HAWKINS J, Kennedy S. 'A quite unprecedented achievement'? Responding to the 1950s terms of trade boom. 2007. Paper presented at University of Melbourne Economic History Workshop, Melbourne, Australia.