12 / 16 / 21, 10 : 38 am the rba and the australian economy | speeches | rba speech the rba and the australian economy philip lowe [ * ] governor address to cpa australia riverina forum wagga wagga – 16 december 2021 i would like to thank the cpa for inviting me to your riverina forum. it is a great pleasure for me to be able to join you here in wagga wagga, where i grew up. i had the good fortune of attending sacred heart primary school in kooringal, st michael's and then trinity senior high school. it was at trinity, though, where i first became interested in economics. and that was thanks to an inspiring teacher, mrs king. in her classroom she explained how economics could be used to address the world's problems and how the right combination of the invisible hand of the market and government regulation could maximise the welfare of our society. i remember being struck by these powerful ideas and they have stayed with me through the years. in wagga, i also learnt the value of hard work and the challenges of running a small business. during my high school years, my father had a petrol station and auto accessories shop at the bottom of fitzmaurice st. it was an old - style, full service petrol station and i spent many hours on cold winter mornings and hot summer afternoons pumping petrol. the valuable life lessons i learnt there complemented those that i learnt in the classroom. given that i am back here today as the governor of the rba, i would like to begin by saying a few words about what the rba does and then turn to some of the current economic issues we are working through. the reserve bank of australia you might be thinking that you know what the rba does : it sets interest rates and conducts monetary policy. that would be correct, but our functions are much broader than that. as australia's central bank, we print and issue australia's banknotes. our colourful polymer banknotes are some of the best in the world and include cutting - edge security features to guard https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 12 - 16. html 1 / 16 12 / 16 / 21, 10 : 38 am the rba and the australian economy | speeches | rba against counterfeiting. these notes are printed at our print works in outer melbourne, where we also operate a mega

; 4. negative us savings, in the household sector stimulated by stock exchange bubble and later by a lot of local housing bubbles 6 ; and in the public sector, however there are very different estimates about the impact of the budget deficit in the united states on the us current account deficit ranging from 0. 2 to 0. 5 7 ; 5. effects of asian crises in 1990s combined with the pursuance of export - led growth model in asia 8 ; 6. shocks changing the relative investment prospects of various parts of the global economy 9, such as productivity shock in the united states in the mid - 1990s or the inability of asian countries to generate good quality financial assets ; 7. much higher rates of return enjoyed by united states on its foreign assets than the cost of its foreign liabilities 10, this cushioned the trade deficit impact on net international investment position and was labelled as us ‘ exorbitant privilege ’ ; 8. global imbalances are optimal choices of rational us consumers 11, who expect that the usa will account for a bigger share of global gdp in the future ; 9. there are theories about imbalances originating from the statistical offices ’ failure to account properly for the us exports of ‘ dark matter ’ 12. 10. recently ricardo caballero 13 presented his theory that ( financial ) asset shortages are at the heart of the global imbalances problem, and his idea was also put forward by raghuram rajan 14 speaking recently on ( real, fixed ) asset shortages. asset shortages hypothesis rajan r. ( 2006 ) “ perspectives on global imbalances ”, remarks by economic counsellor and director of imf research department at the global financial imbalances conference london, united kingdom, 23 january 2006 ; and rato r. “ shared responsibilities : solving the problem of global imbalances ”, speech of the international monetary fund managing director at the university of california at berkeley, 3 february 2006. greenspan a., kennedy j. ( 2005 ) “ estimates of home mortgage originations, repayments, and debt on one - to - fourfamily residences. ” federal reserve board, finance and economics discussion series paper 2005 - 41 ; lansing k. “ spendthrift nation ”, frbsf economic letter, november 2005. greenspan a. ( 2005 ) “ current account ” presentation at advancing enterprise 2005 conference ( london, united kingdom ), 4 february 2005 ; oecd ( 2004 ) “ economic outlook ”, june 2004 ; far