But as a society, we have a lot riding on finding a way to pay for the infrastructure that we need to boost our productivity and improve our living standards. Hopefully, the work currently being undertaken by the Productivity Commission will point us in the right direction.
Economic performance has truly been excellent over the past year with a particularly impressive combination of low core inflation and low unemployment in 1996. But this performance does not suggest that the business cycle is dead or that the Phillips Curve is no longer relevant. The decline in core inflation during 1996 most likely reflects the role of a coincidence of favorable supply shocks.