Answer Happy

Obtain the following macroeconomic data for Australia for the
period 2004-2021: (a) the yield for Commonwealth Government
securities, (b) the budget balance, (c) the cash rate, and (4)
90-day and 180-day rates.
1. Examine the fiscal position (i.e. movement of the budget
balance) of the Australian Federal Government for the period
2004-2021. How has the budget balance changed since the COVID-19
pandemic? Briefly predict how you expect the budget balance to move
over the next three years.
2. Graph the current Australian yield curve for Commonwealth
Government Securities (CGSs). At a minimum you must include the
target cash rate, 90-day and 180-day rates, and the 2, 3, 5, and
10-year rates. Explain the shape of the yield curve. Is your
explanation consistent with the Expectations theory or the
Segmented Market theory of the yield curve, or nether?
3. Examine the relationship between the fiscal position
identified in (1) and the yield curve. Does the fiscal balance
appear to influence the yield curve, especially since the COVID-19
pandemic?
4. Given your insights from (1) – (3), recommend to the
Australian Government financial and fiscal policies that could make
Commonwealth Government Securities more attractive to
investors.