This paper analyses the COVID recession and the large fiscal policy response by modelling three scenarios using a macro-econometric model.

The Treasury Macroeconometric Model of Australia (EMMA) is a framework to support macroeconomic forecasting, and counterfactual policy and scenario analysis at the Treasury. It has been developed, tested and used since 2018. The focus of this paper is to outline the model’s structure and describe its place within the macroeconomic modelling literature.

The first part of this paper develops a theoretical model of fiscal equalisation to derive an optimal equalisation formula that has general applicability for federations. If vertical equity is achieved by the central government and horizontal equity by interstate migration, the welfare-maximising role of fiscal equalisation is to support an efficient distribution of different labour...

By international standards, Australia’s business tax system combines a high company tax rate of 30 per cent with low taxation of domestic investors through dividend imputation. This prioritising of domestic investors over foreign investors is at odds with the evidence in this paper that the marginal investor is foreign. Better aligning Australia’s business tax system...

Using economy-wide modelling, this paper quantifies the substantial consumer benefits from tax reforms that reduce the corporate tax rate, narrow the base to economic rents, or replace imputation with less generous dividend tax concessions.