The pattern of boom and bust that characterised the Australian economy from the early 1970s to the early 1990s currently seems to be a thing of the past as Australia enters its sixteenth year of uninterrupted expansion. The expansion has lasted twice as long as those of the 1970s and 1980s, which raises the question — why has it happened?
One way of approaching this question is to identify the factors that previously precipitated major slumps or recessions. The major recessions of the mid 1970s, the early 1980s and the early 1990s, were induced by monetary policy and a determination by the Treasury and Reserve Bank to slow an overheated economy. The first two policy-induced recessions were aimed primarily at fighting
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