The Economic Consequences of Mr Trump and Mr Biden

• Published date: 01 December 2023
• Author: Ross Garnaut
• Date: 01 December 2023
• DOI: http://doi.org/10.1111/1467-8462.12533

The Australian Economic Review, vol. 56, no. 4, pp. 417–430 DOI: 10.1111/1467-8462.12533

Special Article

The Economic Consequences of Mr Trump and Mr Biden

Ross Garnaut

Abstract

Max Corden and Ross Garnaut published

‘The Economic Consequences of Mr Trump’

in this journal in 2018. This paper examines

what has transpired in the US economy

against that article. It notes continuity in

budget and trade policy from the Trump

Presidency to the Biden Presidency. The

continuity in macro‐fiscal and trade policies

is accompanied by a significant departure in

the focus of fiscal expansion: Mr Biden's

strong support for decarbonisation. The

article applies Max Corden's approach to

international economics to the question:

should Australia emulate Mr Biden's combi-

nation of budget, protection and decarbonisa-

tion policies?

1. Introduction

Max Corden's' most recent publication is his

2018 joint article with me in the Australian

Economic Review,‘The Economic

Consequences of Mr Trump’. If we were

writing today, the title might be ‘The

Economic Consequences of Mr Trump and

Mr Biden’, as there has been continuity across

the two presidencies in the fiscal and trade

policies that we discussed five years ago.

President Biden in practice has taken the

Trumpian combination of increasing budget

deficits and trade protection a step further in

his Inflation Reduction Act (IRA), while

increasing incentives for decarbonisation of

the US economy.

This lecture in Max Corden's honour

applies Max's approach to analysing economic

problems to one big question: should

Australia emulate Mr Biden's IRA and the

policies in which it is embedded?

Max has been the economics profession's

teacher. His published work and his lectures

have always been models of clarity and

precision. His book Trade Policy and

Economic Welfare half a century ago pre-

cisely and clearly set out nearly the whole of

what is important for policy in economic

thinking about international trade (Corden

1974). His Inflation, Exchange Rates and

the World Economy 46 years ago applied the

best of international macro‐economic theory

to understanding the new problems of a

world disrupted by floating exchange rates

and shocks from suddenly higher energy

prices (Corden 1977).

*University of Melbourne, Victoria 3100, Australia;

email <ross.garnaut@unimelb.edu.au>. This is an edited

version of the 2023 Corden Lecture given at the

University of Melbourne. Editor's note: The lecture was

delivered just 10 days before Max Corden's death on 20

October 2023. He was 96. With Max's passing the world

has lost one of its most influential and most respected

economists. In this article, Ross Garnaut, who was a close

friend and colleague, provides insights into Corden's

approach to economics.

© 2023 The Author. The Australian Economic R eview published by John Wiley & Sons Australia,Ltd on behalf of The University of

Melbourne, MelbourneInstitute: Applied Economic & Social Research, Faculty of Businessand Economics.

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