Australian government balance sheet management
By: Wilson Au-Yeung, Jason McDonald, Amanda Sayegh
Contributors: McDonald, Jason; Sayegh, Amanda; National Bureau of Economic Research
Series: NBER working paper series -- working paper 12302; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 12302.
Publisher: National Bureau of Economic Research
Published: 2006
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "Since almost eliminating net debt, the Australian Government's attention has turned to the financing of broader balance sheet liabilities, such as public sector superannuation.  Australia will be developing a significant financial asset portfolio in the 'Future Fund' to smooth the financing of expenses through time.  This raises the significant policy question of how best to manage the government balance sheet to reduce risk.This paper provides a framework for optimal balance sheet management.  The major conclusions are that: fiscal sustainability depends on both the expected path of future taxation and the risks around that path; optimal balance sheet management requires knowledge of how risks affect the balance sheet (and therefore volatility in tax rates); and the government's financial investment strategy should reduce the risk to government finances from macroeconomic shocks that permanently affect the budget.Based on this framework, we find that a Future Fund portfolio that included (amongst other potential investments) domestic nominal securities and equities of selected countries would reduce overall balance sheet risk"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/28/2006.

Includes bibliographical references.

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