Implicit in the numbers mentioned by Cater are the broader economic variables of the time periods…

BastiatCat — I see what you mean, but a couple of things:

a) The impact of a decline in the u-rate on Newstart disbursements would still have very little impact on the nominal ‘welfare bill’ as defined in Cater and in the David Crowe article upon which Cater was based, simply because unemployment benefits constitute such a small part of the total disbursement.

b) It may very well be the case that NGDP doesn’t grow at 5.5% either because of lower than trend inflation or lower than trend RGDP growth, but the first of these will also lower all nominal benefit payments, and, probably, costs of other in-kind welfare spending (indexed to CPI in the case of allowances); the second would also lower disbursements insofar as lower RGDP growth is usually accompanied by lower wage growth, and the two biggest payments (DSP and the OAP) are indexed to average wages. In other words, NGDP growth that’s lower than the assumed rate should also cause us revise downward our estimate of nominal welfare disbursements.

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