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The Social Opportunity Cost of Consumption for Australia, 1960–61 to 1988–89
Author(s) -
McDonald Ian M.,
Tacconi Luca,
Kaur Ravjeet
Publication year - 1992
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.1992.tb00575.x
Subject(s) - consumption (sociology) , framing (construction) , economics , investment (military) , government (linguistics) , political science , sociology , engineering , social science , linguistics , philosophy , politics , law , structural engineering
The social opportunity cost of consumption (SOCC) for an economy is the rate at which current consumption can be traded for consumption in the future. The SOCC is an important determinant of the socially optimal levels of investment and the current account surplus and should be an input into the framing of government economic policy. Using overseas interest rates, the SOCC for Australia is calculated in this article. The calculated series is fairly constant for the 1960s and then has a pronounced cyclical pattern from the late 1960s to 1988–89. The average value of the SOCC for Australia is about four per cent.