rachelalyce01 said:
What's the Target Band for Economic Growth?
I remember my teacher saying something about a Target Band, or at least something the Government likes Economic Growth to be between... for it to be sustainable.
I think it was 3 - 4%?
Or am I just talking about something that doesn't exist?
Thanks.
Well probably first things first, it is good to define what is meant by sustainable economic growth.
Generally in this context we refer to growth that does not cause excessive inflation nor external stablility.
Politically it is nice for politicians to point out that our "sustainable rate of growth" has increased. Subsequently this has become part of the economic terminology used by politicians but not really by economists. 3.5 - 4% was a sustainable economic growth rate target set by the Howard government and it is fair to say that it was achieved with the average growth rate being 3.75% over the period. However it is unlikely that similar rhetoric will be used under the Rudd government mainly because the focus has been on inflation, and as you know in the short term there is a trade off between the two (and we are currently experiencing high inflation worldwide).
But try not to look too much into the concept as it is just a nice way of rephrasing something that we've had all along (GDP growth) for the purposes of political spin. That being said governments should be able to point out that the average rate of growth has increased. This is one of the main reasons why the SEG (sustainable economic growth rate) was invented. They used it to say 'HEY, WE'VE INCREASED THE SEG RATE! YAY'.
