time, but like the uk, it is the average that matters. one consequence of lower inflation in australia is the convergence of our bond yields to international norms, or at least the us norm ( graph 4 ). some of you may have been able to remember that as recently as a decade ago, australian government bonds were 400 basis points higher than us government bonds. we think of that as the bad old days, but if you were an international funds manager, you may look back on it as the good old days. another factor that has contributed to the improved acceptance of australian government paper is the recognition that our fiscal policy is very responsible by international standards. the budget has been in surplus for some time now. this, together with the proceeds of the privatisations i referred to earlier, has meant that the outstanding stock of government debt has fallen in absolute terms, and as a percentage of gdp is now the lowest among developed countries ( table 5 ). table 5 : public debt per cent of gdp ; 1999 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - italy 117. 7 belgium 114. 1 japan 105. 4 canada 86. 9 spain 70. 4 sweden 68. 3 france 65. 2 netherlands 62. 9 germany 62. 6 united states 59. 3 denmark 55. 4 united kingdom 54. 0 finland 44. 9 new zealand 34. 8 norway 34. 3 australia 31. 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - source : oecd economic outlook, december 1999 i am not sure how fully aware international investors are of these excellent figures on growth, inflation, productivity, public debt, etc., so i have taken the liberty today of indulging in a bit of trumpet blowing. one economic fact, however, that markets are aware of is that australia always runs a substantial current account deficit and, therefore, is a net importer of capital. i have nothing very new to say on this subject other than to point out that it is the result of private agents ’ decisions rather than government ’ s demands on capital markets, and that its magnitude has not changed very much in the last 20 years. it has varied cyclically, of course, but around a basically flat trend. at its cyclical

reverse repurchase facility. this is done in close concert with economists at the board of governors. longer - term work to assess what monetary policy framework is most consistent with the goals of monetary policy and financial stability. new york fed economists have made many contributions to the theory and measurement in new keynesian models, focusing on monetary policy at the zero lower bound, and incorporating financial frictions into more standard macro models. dynamic stochastic general equilibrium ( dsge ). bis central bankers ’ speeches microeconomic and regional policy new york fed economists also have important opportunities supporting microeconomic and regional policy. these include the survey of consumer expectations, which will launch this month, and the consumer credit panel, which, using raw data supplied by equifax, allows us to develop insights into consumer indebtedness at the micro - level. these panels give us and the public unique insights into household beliefs and behavior. one example is the work highlighting the growing aggregate student loan debt balance and repayment burden. an important responsibility for each of the reserve banks is coverage of economic development in its region. a significant aspect of this work at the new york fed involves our regional press briefings, business surveys, and white papers. one notable example has been the new york fed economists ’ work in developing a white paper that highlighted some key choices that puerto rican policymakers might make to eliminate structural constraints that have impinged on the island ’ s economic performance. i ’ m very pleased by the contributions of our economists in the bank, whether they sit in the research group or elsewhere in the bank. i think we have helped to contribute to the considerable progress made on a number of fronts, including making the financial system more resilient and robust and helping make monetary policy more effective, even at the zero lower bound. but there is much more work to do. in particular, i think we have just scratched the surface in understanding how developments in one area, such as capital and liquidity requirements for large, complex financial institutions, affect other areas, such as effective monetary policy implementation. we still don ’ t have well developed macro - models that incorporate a realistic financial sector. we don ’ t understand fully how large - scale asset purchase programs work to ease financial market conditions – is it the effect of the purchases on the portfolios of private investors, or alternatively is the major channel one of signaling? there are many other riddles that remain to be solved. how does one design an effective reference rate that is