From Bloomie:
Faced with a scary housing bubble not terribly unlike that in the U.S. five years back, Governor Graeme Wheeler should be tapping the brakes now, and hard, or so holds classical monetary theory. Doing so, however, would jeopardize the nation’s 2.5 percent growth amid general global uncertainty. Instead, Wheeler is conducting an experiment: limits on leveraged lending.
The idea, says economist Stephen Koukoulas, is to “contain the house price bubble without inflicting collateral damage to the rest of the economy.” Koukoulas was an economic adviser to Julia Gillard, Australia’s prime minister until June. And it’s significant that he’s recommending that Australia’s much larger economy emulate New Zealand’s experiment.
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