An article that a wrote for "The Conversation".
Comments welcome
Thursday, July 14, 2011
Monday, May 23, 2011
What happens to the market equilbrium when.......
Linked is an interesting situation to which the microeconomic principles of demand and supply curves may be used.
Wednesday, February 9, 2011
I always knew that economists were more knowledgeable than mathematicians and scientists....
http://economics.com.au/?p=6674
A definition of competition
I was reading an article whilst traveling home on the train last night. The following definition of competition was noted "a procedure for discovering facts which, if the procedure did not exist, would remain unknown or at least would not be used." Hayek, F.A. 1968/2002 Competition as a discovery procedure (Marcellus S. Snow Trans.) Quarterly Journal of Austrian Economics 5, 9-23.
Therefore, based on this definition, one may assert that were competition is stifled, facts are mysteries waiting to be discovered but forever hidden.
Therefore, based on this definition, one may assert that were competition is stifled, facts are mysteries waiting to be discovered but forever hidden.
Tuesday, February 8, 2011
What is economics?
A question that is often asked is, "what is economics?" Many answers to this question have been presented. For example:
http://www.economicshelp.org/blog/economics/economics-science-or-art/
A recent installment that I found thought provoking was: economics is a science, an art, a competition and politics. (note you may need a NBER subscription to access this article)
http://www.nber.org/papers/w16416 - by Harald Uhlig
http://www.economicshelp.org/blog/economics/economics-science-or-art/
A recent installment that I found thought provoking was: economics is a science, an art, a competition and politics. (note you may need a NBER subscription to access this article)
http://www.nber.org/papers/w16416 - by Harald Uhlig
Tuesday, July 28, 2009
Rudd and "National Competitiveness"
Prime Mininster Rudd's recent essay contains a number of references to global competitiveness.
The Prime Minister needs to have a read 0f Paul Krugman's classic 1974 article in Foreign Affairs.
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.
.... 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).
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 Stewart | Mon - Thurs 11p / 10c | |||
| Lenny Dykstra's Financial Career | ||||
| ||||
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.
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.
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.
Monday, June 29, 2009
Forecasting Australian GDP II
In my last blog I questioned the projections published in the Federal budget documents. Interestingly the OECD has just released its own set of predictions.
The OECD predictions for 2009 and 2010 are -0.4 and 1.2 respectively. The budget projections for 2009/10 and 2010/11 are -0.5 and 2.25. The latest IMF GDP forecasts are –0.5 (2009) and 1.5 (2010). Evidently the budgeted projections are significantly larger than IMF and OECD predictions.
Once again, the real issue is, what impact will smaller growth rates (which are much more likely) have on the economy?
I am not aware of a detailed answer in existence, however smaller growth rates will mean the debt will be larger and around for longer.
Although the prediction periods differ slightly it does not invalidate the concerns outlined above.
The OECD predictions for 2009 and 2010 are -0.4 and 1.2 respectively. The budget projections for 2009/10 and 2010/11 are -0.5 and 2.25. The latest IMF GDP forecasts are –0.5 (2009) and 1.5 (2010). Evidently the budgeted projections are significantly larger than IMF and OECD predictions.
Once again, the real issue is, what impact will smaller growth rates (which are much more likely) have on the economy?
I am not aware of a detailed answer in existence, however smaller growth rates will mean the debt will be larger and around for longer.
Although the prediction periods differ slightly it does not invalidate the concerns outlined above.
Thursday, June 25, 2009
Obesity and advertising
The Age reports that
An article last year in the Journal of Law and Economics estimated the effects of television fast‐food restaurant advertising on children and adolescents with respect to being overweight in the United States. The paper reported that a ban on these advertisements would reduce the number of overweight children ages 3–11 in a fixed population by 18 percent and would reduce the number of overweight adolescents ages 12–18 by 14 percent.
The voluntary code is clearly less costly in welfare terms than an outright ban on advertising, as it does not impose significant welfare costs on those children and adolescents who consume fast food in moderation and may benefit from the provision of information. The report suggests that the code appears to apply to a range of "marketing efforts" (perhaps including radio and magazines?) and not simply television advertising, which is important given the potential for media substitution (although it could be argued that television advertising is relatively effective when it comes to youth consumption choices).
Australia's fast food industry has agreed to a voluntary code to govern the way it markets products to children.
The code sets new nutrition standards for the foods featured in television advertisements, and other marketing efforts, which target the under-14s.
Seven fast food chains - including McDonald's and KFC - have signed up to the initiative, which will also dictate how they can interact with schools while requiring improved nutrition information disclosure to parents.
An article last year in the Journal of Law and Economics estimated the effects of television fast‐food restaurant advertising on children and adolescents with respect to being overweight in the United States. The paper reported that a ban on these advertisements would reduce the number of overweight children ages 3–11 in a fixed population by 18 percent and would reduce the number of overweight adolescents ages 12–18 by 14 percent.
The voluntary code is clearly less costly in welfare terms than an outright ban on advertising, as it does not impose significant welfare costs on those children and adolescents who consume fast food in moderation and may benefit from the provision of information. The report suggests that the code appears to apply to a range of "marketing efforts" (perhaps including radio and magazines?) and not simply television advertising, which is important given the potential for media substitution (although it could be argued that television advertising is relatively effective when it comes to youth consumption choices).
Quarantine and trust in public health authorities
Given the risk of quarantine detention in Singapore and China as a result of swine-flu fears, it is useful to consider the different attitudes towards quarantine across countries. A paper in Health Affairs in 2006 reports on a survey of residents of Hong Kong, Taiwan, Singapore, and the United States in relation to their attitudes towards compulsory quarantine during a public health emergency. Some interesting cross-country differences emerge, and may help to explain the different trade-offs that countries are currently making between public health and individual liberties. For example, as reported in the table below, trust in public health authorities is significantly higher in Singapore than in the United States, Hong Kong and Taiwan.
Isolation and quarantine during a pandemic raise important ethical issues, and need to be taken into account in the process of preparedness planning and policy formation. These issues do not appear to have been widely discussed in Australia.
Isolation and quarantine during a pandemic raise important ethical issues, and need to be taken into account in the process of preparedness planning and policy formation. These issues do not appear to have been widely discussed in Australia.
Sunday, June 21, 2009
The Sun Also Sets
Today's Sunday Age reports on the decline of Victoria's solarium industry
Is the dramatic decline in solarium use the result of the regulatory response to some supposed market failure in the solarium industry? Is it the response to new information regarding the adverse health effects of excessive solarium use? Or does it suggest that we are particularly open to influence from people who we like, which may in turn give rise to a dramatic shift in social norms?
VICTORIA'S solarium industry is on the brink of collapse, with increased skin cancer fears and a crackdown on rogue operators sparking a 45 per cent drop in the number of tanning salons.
Government figures obtained by The Sunday Age show that 196 businesses have either closed or removed their sunbeds since State Government regulations were introduced in February last year.
Owners say customers started abandoning tanning salons following the public cancer battle of 26-year-old Clare Oliver, who died in September 2007 from melanoma she and her oncology team linked to solarium use.
Since the introduction of the laws, which ban children from using solariums and force operators to display health warnings or risk $1 million fines, the number of tanning salons across the state has plummeted from 436 to 240. But while cancer experts celebrate the news, the industry claims it is a victim of a scare campaign that saw solarium operators compared to heroin dealers...
"The whole Clare Oliver saga just scared a lot of people off. People were comparing us to heroin dealers … It's one thing to regulate, but another thing to wipe out an entire industry."
Is the dramatic decline in solarium use the result of the regulatory response to some supposed market failure in the solarium industry? Is it the response to new information regarding the adverse health effects of excessive solarium use? Or does it suggest that we are particularly open to influence from people who we like, which may in turn give rise to a dramatic shift in social norms?
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