Tuesday, July 28, 2009

Rudd and "National Competitiveness"

Prime Mininster Rudd's recent essay contains a number of references to global competitiveness.
.... Australia cannot meet the challenges of raising our global competitiveness if we do not lift productivity growth.

The Prime Minister needs to have a read 0f Paul Krugman's classic 1974 article in Foreign Affairs.

competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous.

Absolute levels of productivity, rather than levels of productivity relative to our trading partners, are what matters for living standards. The Prime Minister appears to limit his attention to productivity growth in tradeables, but there is no reason to ignore productivity growth in non-tradeables.

Davidson and Kates Make Page 2 of the Oz

My colleagues Professor Sinclair Davidson and Dr Steven Kates are mentioned on page 2 of today's The Australian.

Rudd fails economic history lesson, Christian Kerr, July 28, 2009 ....PRIME Minister Kevin Rudd has got his economic history in his latest exercise in essaying "exactly wrong". That's the view of RMIT University academic Sinclair Davidson, who says it doesn't augur well for our future......

Davidson wants to know how we can trust a bloke who has got the past wrong to lead us into the future.....

Davidson points to research by RMIT colleague Steven Kates which shows how unemployment in Australia after 1932 fell more swiftly than in the US and Britain. The essay shows how ignorant Kevin Rudd is of Australian economic history.....

All up, Davidson describes the background to Rudd's latest essay as extraordinary. "He's put us into debt to the tune of $300 billion having claimed to have learned lessons that he doesn't know."

Sunday, July 26, 2009

Quote of the Day

Endangered Species for Sale? by David Zetland, posting at Aguanomics

The difference between abundant chickens and endangered tigers is property rights. Chickens are owned by individuals who protect them from others; tigers are owned by "us" and protected by nobody. If you want to save the tigers, sell them.

Friday, July 24, 2009

Can Governments Promote Long Run Growth?

Looking back to the 2009-10 Federal Budget, much was made of the "infrastructure measures that represent a critical investment in the drivers of Australia's long run economic growth".

A recent paper suggests, however, that promoting long-run sustained growth is much trickier than boosting short-run growth. The paper concludes that "Except for the decades around WWII, there is no evidence of country specific effects on long run growth rates…Growth rates are determined by international factors, and are insensitive to national policies, especially for small countries. This implies severe restrictions on the ability of most governments to increase national long run growth rates". (HT: Stumbling and Mumbling).

Price Elasticity of Marriage

A new paper concludes that “even small changes in the cost of marriage can have significant effects”, suggesting that marriage demand is quite price-elastic.

Financial Guru

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Lenny Dykstra's Financial Career
Daily Show
Full Episodes
Political HumorJoke of the Day

The State of Macroeconomics

These three articles in The Economist, on the state of macroeconomics, make for interesting reading. Brad de Long, Paul Krugman and Stumbling and Mumbling comment. Mark Thoma provided useful discussion on this topic back in April.

Martin Feldstein Lecture by John Taylor

Martin Feldstein Lecture - 7/12/2009 from NBER on Vimeo.

Monday, July 20, 2009

The Great Moderation no more

Preparing for this evening's introductory International Monetary Economic's lecture, I re-read Ben Bernake's 2004 speech to the Eastern Economic Association on the decline in macroeconomic volatility, entitled The Great Moderation. How things change, and what an interesting time to study open economy macroeconomics.

Thursday, July 16, 2009

Jeff Frankel on Global Currency Issues

Jeff Frankel delivered the keynote speech at a recent joint Bank of Canada-ECB workshop. "On Global Currency Issues", outlines what's "out" and what's "in" in international finance (Powerpoint presentation here). One of the phenomena he concluded was no longer relevant was "the global saving glut". (HT. Econbrowser)

Friday, July 3, 2009

Iran "at sixes and sevens"

The phrase at sixes and sevens simply means "state of confusion or disarray"

It is undeniable that Iran is currently experiencing a state of disarray. However the phrase takes on a second meaning when a little bit of statistical analysis is applied to it's the election results.

Basically, there are too many sevens and not enough fives. Chris Lloyd has written a very nice blog on this and I encourage you to read it for yourself. Essentially he concludes that the results are characteristic of a human's attempt to generate numbers.

Interestingly he also suggests a more effective method of fabricating election results.