Judging effects of fiscal policy needs carefulness

Comments on Alan Kohler “Big Brother is managing you”, 17/12/2009, http://www.businessspectator.com.au/bs.nsf/Article/Big-Brother-is-managing-you-pd20091217-YSS7E?OpenDocument&src=sph

Alan, with all respect, I think there is a logical problem in some of the argument here.

Yes, there is no question that the Australian has been performing the best in the wake of the crisis and the Rudd government did spent the second largest stimulus in the world after China.

But that does not necessarily mean that it follows that the Australia's best performance was the result of the Rudd stimulus or in another word the success of the Rudd stimulus resulted in the best economic performance among the western economies.

In your line of argument, you implicitly assumed away the baseline scenario and the different external impacts on different western economies of the Asian economies especially China's.

So blindly singing praises to the Rudd stimulus is simply spurious, illogical and irrational.

It is obviously problematic.

We need objective and rational analysis of the role the fiscal stimulus played, not to understate it, not to overstate it.

That will require rigorous discipline, not superficial and empty statements, or political spins.

A sound analysis will be useful to future use of fiscal policies.