The Weekend Quiz – September 11-12, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Read more

NSW fails to control Covid (incompetence) and the labour market contracts sharply across the nation

There were two significant data releases from the Australian Bureau of Statistics this week that provide information about the state of the labour market – both in the short-term and also in terms of longer-term trends. The first release (September 8, 2021) – Labour Account Australia – June 2021 – is a quarterly dataset that allows us to tie together information about employment, persons, hours and payments. The second release today (September 9, 2021) is the – Weekly Payroll Jobs and Wages in Australia – Week ending August 14, 2021 – which is Australian Tax Office data that provides a much more current view of how the labour market is performing. That snapshot is especially valuable given the on-going tight lockdowns in Sydney and Melbourne and the impact they are having on employment and wages.

Read more

European growth positive but weak

It’s Wednesday, so just a few items that have passed me by this week. Eurostat published the latest national accounts data yesterday (September 7, 2021) that reveals that key Eurozone states are still lagging behind where they were before the pandemic. In some cases (Italy and Spain), they hadn’t even got back to pre-GFC levels of activity before the pandemic stuck. So a double hit to these nations in the space of a decade or so. That damage will be immense and demonstrates once again the dysfunctional nature of the currency union. Then I consider the latest nonsense from the Business Council of Australia – which is just a special pleading organisation for the top-end-of-town. They think it is time to go back to the deficits are bad narrative (except when their members are receiving corporate welfare that is). And to calm down after that we have some jazz, of course.

Read more

As the mainstream paradigm breaks down

On September 2, 2021, the Head of the BIS Monetary and Economic Department, Claudio Borio gave an address – Back to the future: intellectual challenges for monetary policy = at the University of Melbourne. The Bank of International Settlements is owned by 63 central banks and provides various functions “to support central banks’ pursuit of monetary and financial stability through international cooperation”. His speech covers a range of topics in relation to the conduct of monetary policy but its importance is that it marks a clear line between the way the mainstream conceive of the role and effectiveness of the central bank and the view taken by Modern Monetary Theory (MMT) economists. I discuss those issues in this blog post.

Read more

US labour market recovery stalling

Last Friday (September 3, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – August 2021 – which reported a total payroll employment rise of only 235,000 jobs in August and a 0.2 points decline in the official unemployment rate to 5.2 per cent. The results suggest that the labour market recovery has slowed quite significantly. The US labour market is still 5,333 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging.

Read more

The Weekend Quiz – September 4-5, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Read more

The Bank of Goldman Sachs at Threadneedle Street

As I provided a detailed analysis of the National Accounts release yesterday, today, I am writing less via the blog and am shifting the Wednesday music feature to Thursday. That makes sense. Today, I am bemoaning the creation of the Bank of Goldman Sachs, formerly known as the Bank of England. Groupthink seems to plague this institution. And then, to restore equanimity, we have a music tribute to Lee ‘Scratch’ Perry who died in Jamaica this week.

Read more

Australian national accounts – growth 3 months ago but no guide to current situation

Time series data is somewhat difficult to use at present because of the dramatic impact the pandemic (and the lockdowns) has had on behaviour. It is difficult to conduct precise statistical work that spans this period and in the future, econometricians like me will have to use special techniques to isolate these observations if we are to get anything meaningful from the data over longer horizons into the future. National accounts data is also fraught at the best of times because of the lags in collection and publication. It tells us where we were three months ago and three months before that. So while today’s data release from the Australian Bureau of Statistics of the – Australian National Accounts: National Income, Expenditure and Product, June 2021 (released September 1, 2021) – shows that the Australian economy grew by 0.7 per cent in the March-quarter after growing by 1.9 per cent in the March-quarter 2021. The annual growth rate of 9.6 per cent is relatively meaningless given the base effect noted above. Household consumption growth is positive but subdued. Business investment while positive has tapered somewhat. The external sector undermined growth as exports fell sharply. The public sector contributed 0.7 points to growth, which means that without that fiscal support (at both federal and state level), there would have been zero growth. With the NSW and Victorian economies now enduring a long lockdowns the next quarter will record negative growth and there is clearly a need for increased fiscal support.

Read more
Back To Top