Source: Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb October 31, 2016.
Is Moore’s Law getting a 1000 times harder?
02 Nov 2016 Leave a comment
in economic growth, economic history
The Broken Window Fallacy
26 Oct 2016 1 Comment
in budget deficits, business cycles, economic growth, economics, fiscal policy, macroeconomics Tags: crowding out
Current Trends in Economics – Robert E. Lucas Jr.
17 Oct 2016 Leave a comment
in applied price theory, development economics, economic growth, economic history, growth disasters, growth miracles, macroeconomics Tags: industrial revolution
Milton Friedman is said to have mesmerised several countries with a flying visit!?
30 Sep 2016 Leave a comment
in business cycles, economic growth, macroeconomics, Milton Friedman, monetarism, monetary economics, politics - Australia Tags: central banks, conspiracy theories, lags on monetary policy, monetary policy, rules versus discretion, The fatal conceit, The pretense to knowledge
Milton Friedman visited Australia in 1975. He spoke with government officials and appeared on the TV show Monday Conference. Apparently, that was enough for him to take over Australian monetary policy setting for the foreseeable future.
When working at the next desk to the monetary policy section in the late 1980s, I heard not a word of Friedman’s Svengali influence:
- The market determined interest rates, not the reserve bank was the mantra for several years. Joan Robinson would be proud that her 1975 visit was still holding the reins.
- Monetary policy was targeting the current account. Read Edwards’ bio of Keating and his extracts from very Keynesian treasury briefings to Keating signed by David Morgan that reminded me of macro101.
See Ed Nelson’s (2005) Monetary Policy Neglect and the Great Inflation in Canada, Australia, and New Zealand who used contemporary news reports from 1970 to the early 1990s to uncover what was and was not ruling monetary policy. For example:
“As late as 1990, the governor of the Reserve Bank rejected central-bank inflation targeting as infeasible in Australia, and cited the need for other tools such as wages policy (AFR, October 18, 1990).”
Bernie Fraser was still sufficiently deprogrammed in 1993 to say that “…I am rather wary of inflation targets.” Easy to then announce one in the same speech when inflation was already 2-3%.
When as a commentator on a Treasury seminar paper in 1986, Peter Boxhall – fresh from the US and 1970s Chicago educated – suggested using monetary policy to reduce the inflation rate quickly to zero, David Morgan and Chris Higgins almost fell off their chairs. They had never heard of such radical ideas.
In their breathless protestations, neither were sufficiently in-tune with their Keynesian educations to remember the role of sticky wages or even the need for the monetary growth reductions to be gradual and, more importantly, credible as per Milton Freidman and as per Tom Sargent’s End of 4 big and two moderate inflations papers.
I was far too junior to point to this gap in their analytical memories about the role of sticky wages, and I was having far too much fun watching the intellectual cream of the Treasury senior management in full flight. At a much later meeting, another high flying deputy secretary was mystified as to why 18% mortgage rates were not reining in the current account in 1989.
Friedman’s Svengali influence did not extend to brainwashing in the monetarist creed that the lags on monetary policy were long and variable. The 1988 or 1989 budget papers put the lag on monetary policy at 1 year, which is short and rapier, if you ask me.
Graduate numbers quadruple! Zero economic growth premium?
29 Sep 2016 Leave a comment
in economic growth, economic history, economics of education, human capital, labour economics, macroeconomics Tags: education premium, endogenous growth theory, graduate premium
Some people get quite excited about the growth benefits and externalities from investing in more human capital such as more young people going to university. In New Zealand, the number of graduates quadrupled over the last 30 years but the trend GDP growth rate is unchanged. Please explain?
Source: Educational attainment of the adult population: The Social Report 2016 – Te pūrongo oranga tangata.
Wealth, Poverty, and Politics | Thomas Sowell on the Importance of human capital
28 Sep 2016 Leave a comment
in applied price theory, development economics, economic growth, economic history, economics of education, human capital, labour economics, macroeconomics Tags: Thomas Sowell
The Solow model and catch-up growth
31 Jul 2016 Leave a comment
in development economics, economic growth, economics, growth miracles Tags: Solow convergence
Best defence of Employment Contracts Act is a @FairnessNZ graphic
24 Jul 2016 1 Comment
in economic growth, economic history, labour economics, macroeconomics, politics - New Zealand, unions Tags: economic reform, Employment Contracts Act, employment protection laws, employment regulation, Leftover Left, neoliberalism, pessimism bias
Source: Low Wage Economy | New Zealand Council of Trade Unions – Te Kauae Kaimahi, with extra annotations by this blogger.
Tertiary attainment of 25-34 and 55-64 year-olds across the OECD
06 Jul 2016 Leave a comment
in economic growth, economics of education, human capital, labour economics, macroeconomics Tags: endogenous growth theory, graduate premium
Some countries have experienced large increases in the number of young people graduating from University when compared to their parents. Germany and the USA aside, all countries have experienced a noticeable increase in young adults with tertiary degrees.
Source: Education at a Glance 2015 – © OECD 01-01-2015.
If human capital is such a major driver of economic growth, should not these countries with large increases in tertiary educated workers be anticipating a growth spurt? The gaps in tertiary attainment across the OECD are much less than they used to be for young adults. Ireland’s burst in tertiary educated workers was after the Celtic Tiger years, not before or during.
Source: Education at a Glance 2015 – © OECD 01-01-2015.
35 Years of the World Economy
04 Jul 2016 Leave a comment
in development economics, economic growth, economic history, growth disasters, growth miracles, macroeconomics Tags: The Great Escape, The Great Fact
% difference between UK’s GDP per capita and EU founding members since 1950
25 Jun 2016 Leave a comment
in economic growth, economic history, international economics, International law
Eurosclerosis started in the 1970s while the British disease came to an end with the election of the Thatcher government so the chart paper is misleading.
Source: Britain’s EU membership: New insight from economic history | VOX, CEPR’s Policy Portal.
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