Evaluation of the effects of macroeconomic variables on the Australian and US economies
Introduction
Macroeconomics is a branch of economics where we study about the performance, structure, and decisions that are made ether it is on a regional level or at a national as a whole. Many variables are included in macroeconomics like the interest rate of a bank, different taxes by the government, and spending of government for growth and stability of the economy. The key indicators of any county economy are
Gross Domestic Product(GDP)
Employment and Unemployment rate in-country
The budget of the country
Inflation or deflation
Objective
In this, we will discuss the different variables of macroeconomic that affect the economy of Australia and the USA and how they perform relatively from 2004-to 2021 and also, how they had a performance during the COVID-19 pandemic.
GDP of Australia and US (2004-2021)
According to trends and graphs of GDP of Australia and the US, it suggests that the GDP performance is not so stable because of some reasons and problems faced by Australia and US every year from 2004 to 2021 to minimize these effect government implements different fiscal and monetary policies (Cassidy, et al., 2020).
Graph trend of Australia and US GDP
For the year 2004 annual growth of Australia was 3% while the US have 3.80%
For the year 2005 growth rate of Australia increase by 1.8% while the US increase by 3.51%
For the year 2006 growth rate of Australia increase by 1.2% while the US increase by 2.86%
For the year 2007 growth rate of Australia increase by 3.1% while the US increase by 1.88%
For the year 2008 growth rate of Australia increase by 1.5% while the US decrease by 0.14%
For the year 2009 growth rate of Australia decreased by 0.2% while the US decrease by 2.54%
For the year 2010 growth rate of Australia increase by 0.6% while the US increase by 2.56%
For the year 2011 growth rate of Australia increase by 1.1% while the US increase by 2.56%
For the year 2012 growth rate of Australia increase by 2.1% while the US increase by 2.25%
For the year 2013 growth rate of Australia increase by 0.8% while the US increase by 1.5%
For the year 2014 growth rate of Australia increase by 1% while the US increase by 1.8%
For the year 2015 growth rate of Australia increase by 0.7% while the US increase by 2.3%
For the year 2016 growth rate of Australia increase by 1.1% while the US increases by 1%
For the year 2017 growth rate of Australia increase by 0.6% while the US increase by 1.7%
For the year 2018 growth rate of Australia increase by 1.3% while the US increase by 2.5%
For the year 2019 growth rate of Australia increase by 0.6% while the US increase by 1.7%
For the year 2020 growth rate of Australia decreased by 1.3% while the US decreased by 4.3%
For the year 2021 growth rate of Australia increase5.4 % while the US increase by 5.97%
From the above analysis of GDP, we can summarise that both countries Australia and US perform well but the GDP of both fell very much during the COVID-19 pandemic but due to good policies Australia does not affect more but the USA got the worst effect on the GDP and some policies of government fail during COVID period (Cassidy, et al., 2020).
Relative budget balance of Australia and USA
A budget is nothing but an estimation of total income; sources of income, and expenditure or spending of government on various projects for the development of the country also for various departments budget provide the whole information that where the government is going to spend money and also sources of income for the country.
The trend of the budget is always high and higher for both countries starting from 2004 the budget balance of Australia was in deficit which was 3.4% of actual GDP but now according to reports in 2021 the budget is surplus of approximately $17.8 billion. The performance of budget gets stronger and stronger year to year in Australia while the budget balance of the USA in 2004 was in deficit which was 19% of actual GDP and according to reports in 2021 USA have deficit Budget of $2.8 trillion which 12.4% of GDP.
So according to data, it is seen that the budget of Australia is a balance that is it is in surplus but the USA also performing well but their budget is still in deficit.
Relative unemployment rate of Australia and USA
The unemployment rate means that due to economic inefficiency the skilled persons who want to work and search for work are not getting work and their skills remain unutilized, and this creates unemployment. Unemployment harms the economy of any country. The unemployment rate suggests the economy of any country is growing and how it is performing in every sector (Hsing, 2019).
As per the graph trend between Australia and US
For the year 2004 Unemployment rate of Australia was 5.4% while the US had 5.53%
For the year 2005 Unemployment rate of Australia was 5.03% while the US had 5.08%
For the year 2006 Unemployment rate of Australia was 4.78% while the US had 4.62%
For the year 2007 Unemployment rate of Australia was 4.38% while the US had 4.62%
For the year 2008 Unemployment rate of Australia was 4.23% while the US had 5.78%
For the year 2009 Unemployment rate of Australia was 5.56% while the US had 9.25%
For the year 2010 Unemployment rate of Australia was 5.21% while the US had 9.63%
For the year 2011 Unemployment rate of Australia was 5.08% while the US had 8.95%
For the year 2012 Unemployment rate of Australia was 5.22% while the US had 8.07%
For the year 2013 Unemployment rate of Australia was 5.66% while the US had 7.38%
For the year 2014 Unemployment rate of Australia was 6.08% while the US had 6.17%
For the year 2015 Unemployment rate in Australia was 6.05% while the US had 5.28%
For the year 2016 Unemployment rate in Australia was 5.71% while the US had 4.87%
For the year 2017 Unemployment rate in Australia was 5.59% while the US had 4.36%
For the year 2018 Unemployment rate in Australia was 5.30% while the US had 3.90%
For the year 2019 Unemployment rate in Australia was 5.16% while the US had 3.67%
For the year 2020 Unemployment rate of Australia was 6.61% while the US had 8.31%
For the year 2021 Unemployment rate of Australia was 4.20% while the US had 6%
As per data according to the graph, we can conclude that the performance of Australia is better than the US because fiscal and monetary policies and maintainable equilibrium of demand and supply always help in reducing the unemployment rate, and also education and training is important so that occupational immobility will not become a hindrance in job finding (Hsing, 2019).
Relative inflation rate of Australia and US
The inflation rate is a broad term that affects every citizen of a country it also refers to the measurement of price increase of goods that we use in daily life like food, clothing, housing, transport, etc. This inflation depends on many factors like an increase in demand for goods, an increase in money supply, and rise in wages, etc (Dreger, et al., 2021).
So according to the graph trend of both countries
For the year 2004, the inflation rate of Australia was 2.34% while the U.S had 2.68%.
For the year 2005, the inflation rate of Australia was 2.69% while the U.S had 3.39%
For the year 2006, the inflation rate of Australia was 3.56% while the U.S had 3.23%
For the year 2007, the inflation rate of Australia was 2.33% while the U.S had 2.85%
For the year 2008, the inflation rate of Australia was 4.35% while the U.S had 3.84%
For the year 2009, the inflation rate of Australia was 1.77% while the U.S had decreased by 0.36%
For the year 2010, the inflation rate of Australia was 2.92% while the U.S had 1.64%
For the year 2011, the inflation rate of Australia was 3.30% while the U.S had 3.16%
For the year 2012, the inflation rate of Australia was 1.76% while the U.S had 2.07%
For the year 2013, the inflation rate of Australia was 2.45% while the U.S had 1.46%
For the year 2014, the inflation rate of Australia was 2.49% while the U.S had 1.62%
For the year 2015, the inflation rate of Australia was 1.51% while the U.S had 0.12%
For the year 2016, the inflation rate of Australia was 1.28% while the U.S had 1.26%
For the year 2017, the inflation rate of Australia was 1.95% while the U.S had 2.13%
For the year 2018, the inflation rate of Australia was 1.91% while the U.S had 2.44%
For the year 2019, the inflation rate of Australia was 1.61% while the U.S had 1.81%
For the year 2020, the inflation rate of Australia was 0.85% while the U.S had 1.23%
For the year 2021, the inflation rate of Australia was 2.82% while the U.S had 4.7%.
From the above data, it is clear that the inflation rate in Australia is much better than in the USA but the sometimes USA performs well in some specific years (Dreger, et al., 2021).
Fiscal policies during Covid 19
Australia
During COVID-19 Australia respond well from starting when 1st case was confirmed in January 2020, the government of Australia use an expansionary fiscal policy in which government revealed additional tax relief for middle-class families, spending on the training of medical staff, and also infrastructure development for recovery of covid-19 patience and giving facilities for quarantine ward which was 0.9% of GDP and also social spending which includes care of aged persons which was 0.7% of GDP. 0.4% of GDP was spent on the program for coronan virus (Ramey, 2016). There was a program for job trainers of people to boost their skills and in March 2020 government announced 11% of GDP for a health package. The state government also announced many packages for their citizens together which was 2.5% of GDP which include tax relief for households, support for health spending like infrastructure packages, and renewable energy sources and technologies (Ramey, 2016).
United state
During COVID-19 USA firstly take so lightly that it caused many problems in the country corona to have the worst effect on corona was that starting President took it so lightly that he did not impose any lockdown in the country because of the economy but after sometime, he imposed a lockdown in the country and made a fiscal policy in which he signed a 4.1% of GDP as a part for COVID-19 fund in which government provides funds for the vaccine, testing of COVID-19, and also for payment of $600 to individual and reduce taxes, $321 billion to help a small business that retains workers and also provide loan assistance to small start-ups. 11% of GDP was announced for unemployment benefits, health assistance, loan subsidies, student loans, health infrastructure, paid leave, and emergency leave for citizens (Ramey, 2016).
Monetary policies during Covid 19
Australia
During COVID-19 Reserve Bank of Australia (RBA) announced a relief package for banks that protect the bank from bankruptcy, it set market liquidity and set repo rates for a long time and also announced a market purchase of A $100 of government bonds. The cash rate was reduced to 0.1% (Romer, 2018).
United State
Federal Reserve introduced many monetary policies in the recession after getting the worst impact of corona in the country, federal fund rates were lowered and purchase of treasury and securities in a needed amount and also introduced facilities that the credit flow. Federal Bank also encourages institutions so that they lend their liquid capital to borrowers affected by COVID-29 (Romer, 2018).
Conclusion
It may conclude from above that both countries Australia and the US perform well in their development from the year 2004 to 2021 in many areas develop well in a constant phase, so that they compete well with the world and become a developed and independent nation, in many areas the US performed well relatively Australia and in many areas Australia did. But during the pandemic time, Australia did well than the US because of the government’s perfect fiscal and monetary policies and also awareness and seriousness of the situation.
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