Should the Future Fund only buy Australian?

A new paper from the Australian Treasury, released as an NBER Working Paper this week (perhaps it’s been around for a while, though this is the first time I’ve seen it), discusses the Future Fund, and makes a sensible point that the government has been skirting around:

Our results also suggest that investing in foreign equities is likely to reduce overall balance sheet risk. In effect, the government already has a significant stake in Australian equities because of the tax revenue earned from domestic capital income (not to mention the presumably highly correlated flow on effects through taxation of domestic labour income).

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5 Responses to Should the Future Fund only buy Australian?

  1. Andrew Whitby says:

    For those of us who don’t have free access to it through SSRN, a preliminary version of the paper is here:

    Click to access au-yeung-et-al8-17-05.pdf

    (And in reference to the earlier thread on ABS fees, any ideas why I should pay $5 for this paper?)

    I had always assumed that there was no question the Future Fund would diversify internationally – as the authors point out, the Australian Government is already somewhat overexposed to Australian assets (including the value of future tax revenues).

    It will be interesting to see how the fund invests.

  2. Eco Student says:

    NBER papers used to be free, and still are if you have an academic email address (they email the paper to your email address for you if you are eligible).

  3. Sinclair Davidson says:

    ‘they email the paper to your email address ‘

    How do you get them to do this?

  4. Tanya says:

    Sinclair: Go to, search for your paper, click on the link that will take you to the paper’s abstract, near the bottom of that page you will see link “Information for subscribers and others expecting no-cost downloads”, click it and you will take you to a page where you can put in your uni email address. You’ll then receive an email with a link to the paper. Unfortunately you have to do this for every paper – i.e. you can’t do a bulk order. Otherwise, I think they may have a direct subscription service that (if your uni library subscribes) you may be able to access while on campus.

  5. Sinclair Davidson says:

    The NBER system doesn’t love me. I used to be able to download stuff, but that stopped. I did look at the help page and this may be an IP address problem. I’ll ask the resident computer nerds to sort out. But thank you for the assistance.

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