Back to the pre-monetarist orthodoxy? (opens in new tab)

On 12 February the Assistant Governor of the Reserve Bank of Australia, Sarah Hunter, gave an important speech on the relationship between the labour market and inflation. This speech suggests the RBA has re-thought its position and has partially gone back to an earlier orthodoxy, but in so doing it now holds untenable positions on such issues as the natural rate of unemployment. We first need a quick potted history of post-war macroeconomic thinking in Australia. In the early post war period...