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The Social Opportunity Cost of Consumption for Australia, 1960–61 to 1988–89

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  • Ian M. McDonald
  • Luca Tacconi
  • Ravjeet Kaur

Abstract

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.

Suggested Citation

  • Ian M. McDonald & Luca Tacconi & Ravjeet Kaur, 1992. "The Social Opportunity Cost of Consumption for Australia, 1960–61 to 1988–89," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 25(1), pages 44-53, January.
    • Handle: RePEc:bla:ausecr:v:25:y:1992:i:1:p:44-53
    DOI: 10.1111/j.1467-8462.1992.tb00575.x
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    References listed on IDEAS

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    1. Ian M. McDonald, 1985. "Macroeconomic Policy in Australia Since the Sixties," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 18(3), pages 6-19, September.
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    Cited by:

    1. Ross Guest & Ian McDonald, 1998. "The Socially Optimal Level of Saving in Australia, 1960‐61 to 1994‐95," Australian Economic Papers, Wiley Blackwell, vol. 37(3), pages 213-235, September.

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