ABSTRACT
This chapter compares the main economic developments leading to and resulting from the high rates of unemployment in the 1930s and the 1980s. It examines the developments in the world economy in Australia and in the main economic aggregates. Share prices are one of the most general economic indicators, with particular relevance for the health of the corporate sector. There was a large rise in real wage incomes early, but wages and consumer prices moved fairly closely together until the cut in real wages in 1931-2. Real unit labour costs fell as a result of strong productivity gains. Productivity tended to decline as GDP grew more slowly than employment. In the early 1980s, net capital inflows increased even more in relation to GDP than did the current account deficit, so that overall balance of payments has shown sizeable surpluses. Exchange rates were much more volatile after the breakdown of the system of fixed exchange rates.
