income – increased by nearly 6 per cent in 2018. this was significantly faster than growth in gross household income. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 13 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba despite the relatively weak picture for household income growth, the tax revenue collected from households has grown solidly in recent years. it's normal for growth in tax revenue to outpace income growth a bit : that is how a progressive tax system works. a useful rule of thumb is that, in the absence of adjustments to tax brackets to allow for bracket creep, for every one percentage point of growth in household income, taxes paid by households will on average increase by about 1. 4 percentage points. that's an on - average figure, though. the actual ratio can vary quite a bit. in the past year, taxes paid by households increased by around 8 per cent, more than double the rate of growth in gross household income of 3½ per cent. so the ratio is more like a bit over two - toone at the moment, rather than 1. 4 to one. that is at the high end of the range this ratio reaches, but as this graph shows, it is not unprecedented ( graph 12 ). but this effect has cumulated over time, so that the share of income that is paid in tax has been rising ( graph 12, bottom panel ). graph 12 what is noteworthy is that for all of the past six years, growth in tax paid has exceeded income growth by an above - average margin, at a time when income growth itself has been slow ( graph 13 ). https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 14 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba graph 13 there are likely to be several things going on here. aside from the usual bracket creep, some deductions and offsets have declined, boosting the overall tax take. interest rates on investment property loans are now higher than for owner - occupiers, but overall the interest rate structure on mortgages is lower than it was a few years ago. so landlords will have lower tax deductions for interest payments on loans on investment properties.

guy debelle : remarks to the international monetary fund research conference remarks by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the international monetary fund research conference, washington dc, 8 november 2013. * * * it is a great honour and pleasure to be here. i, like many in this room, owe stan fischer a great debt. i was the last graduate student that he supervised. you could argue that i drove him out of academia into policymaking! when stan was teaching his macro course at mit, in the very first lecture he used to say : you learn [ the ] islm and mundell - fleming [ models ] in your undergraduate course ( and most of us learnt it from [ rudiger ] dornbusch and [ stanley ] fischer ), then you come to graduate school and we cover that in half a lecture before moving onto teaching more advanced technologies. but then you go out into the real world of policymaking and your first and best intuition still comes from mundell - fleming. so i must say i was struck by emmanuel farhi and ivan werning ’ s claim upfront in their paper1 that, to quote, “ because our model has explicit microfoundations and a formal treatment of general equilibrium, it is better suited for normative analysis than the traditional mundell - fleming models ”. that ’ s a pretty big claim. call me old - fashioned but i ’ m not sure that i buy it. before i get to that, let ’ s think a bit more about some issues that come with a floating exchange rate. emmanuel and ivan talk in their paper about emerging markets, but it ’ s not just an emerging market issue. i will also draw on the australian experience. when the exchange rate is moving in line with the terms of trade, the real fundamentals, it plays the appropriate macro stabilisation role. farhi and werning have that explicitly in their model. in australia ’ s case, over the 30 years of the float, the exchange rate has done just that most of the time. the problem is when financial factors cause the exchange rate to deviate from the real fundamentals. how can that come about? well let ’ s think of a country, which i ’ ll call the usual suspect or us for short. that country pursues an extremely expansionary monetary policy, which is completely justifiable from its perspective. this spills over to