QOTD: “”I have a dream. It involves a Star Trek chair and a bank of monitors.”

Bank of England Chief Economist Andy Haldane:

“I have a dream. It involves a Star Trek chair and a bank of monitors. It would involve tracking the global flow of funds in close to real time, in much the same way as happens with global weather systems.”

Is the binding constraint on better macroprudential policy a lack of timely information? If they had that information, could a world regulator really have averted the crisis in 2007?

Full speech here.

New Zealand politicians want everyone elses wages cut

Our Prime minister, John Key, has decided to say the following:

Prime Minister John Key has indicated he thought the New Zealand dollar’s fair falue was around 65 USc and that it would be logical for the Reserve Bank to intervene to push the New Zealand dollar lower, given it was currently well above where it was fundamentally fairly valued.

Key restated his view that currency intervention was not effective in the long term to try to shift the underlying value of the currency, but agreed it was “fairly logical” for the Reserve Bank to intervene when the currency was so far away from its fundamental value.

Lots of people may think this, most of them without any thought or interest about asking “why” the dollar is where it is, but lots of people do think it.  But a sudden drop in the New Zealand dollar is akin to a cut in wages – all those imports suddenly become more expensive.

Given their standing and thereby ability to seemingly signal intervention in markets, the prime minister and finance minister really need to keep quiet about policy where there is an independent body involved – as it both creates volatility and indicates that such things are a more political issue.  I was pissed off when Cullen did this, pissed off when Key has done it in the past, and I’m pissed off hearing it now.  I don’t care if someone asked the frikken question, part of central bank independence is having fiscal authorities show a bit of discipline with their comments.

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There is no One Model to Rule Them All

I like the influence that physicists are having on economics. Moving towards agent-based modelling in some areas of the discipline is a great idea. But, in addition to lending their novel insights, some seem to enjoy piling on economics generally. Generally you have to take the good with the bad but Mark Buchanan’s latest article is so shockingly bad that I can’t help picking on it. Read more

Recent unemployment is entirely cyclical?

The Treasury has just released a crop of Working Papers. Great to see and will read them with interest.

I had a quick read through the first one, which is on “Recent Unemployment Experience in New Zealand

It’s an interesting paper and worth a read. But they reach a surprisingly strong conclusion, where I think a more nuanced interpretation is required: Read more

The arguments about “macroeconomic methodology”

There has been a series of posts by people discussing a new book, “Big Ideas in Macroeconomics“.  Ryan Decker points out a good post by Steven Williamson that has links to other posts.  I haven’t read the book, in fact I haven’t ordered it yet (but intend to) – but I don’t really intend to talk about the book, so I think I’ll be ok.  Instead, I am going to discuss the posts – as I’ve been reading them as they have come out.

The first post was over at Uneasy Money, a blog I really enjoy if you don’t already read it :)

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