The Case of the Missing Report – Part 2

Today, we solve the ‘Case of the Missing Report’. Recall from – The Case of the Missing Report – Part 1 – that the Asian Development Bank published a report I had written (with Randy Wray and Jesus Felipe) – A Reinterpretation of Pakistan’s ‘economic crisis’ and options for policymakers (draft version) – in June 2009 as part of work I was undertaking for the Bank at the time on economic development in Central Asia. The report was published on June 1, 2009 as an official ADB Economics Working Paper No. 163 after our presentations were enthusiastically received at the Bank during seminars we gave. The Report was indexed by the major bibliographic and indexing services and evidence of that report still exists today. For example, the Asian Regional Integration Center provides a link to some 30 records covering – Pakistan – including our ADB paper with the official publication date. The ‘official’ link to the publication – https://www.adb.org/Documents/Working-Papers/2009/Economics-WP163.pdf – however, now returns a ‘Page not Found’ error. Then, if you search for ADB Economics Working Paper No. 163 on the ADB WWW Site you will find another paper – The Optimal Structure of Technology Adoption and Creation: Basic Research vs. Development in the Presence of Distance to Frontier – which somehow became Working Paper No 163 and was also published in June 2009. So what gives? How did our ADB Economics Working Paper No. 163 disappear from the face of the Earth to be replaced by another ADB Working Paper No. 163, all in the space of a day or so? In this Part 2 of the ‘Case of the Missing Report’, I provide the solution to the mystery.

Read more

Australia – inflation continues to fall and the RBA should cut interest rates

The Australian Bureau of Statistics (ABS) released the latest – Consumer Price Index, Australia – for the December-quarter 2024 today (January 29, 2025). The data showed that the inflation rate rose by just 0.2 points in the quarter and has fallen to 2.4 per cent on an annual basis (down from 2.8 per cent). The inflation rate has been within the RBA’s inflation targeting range for the last 6 months and with inflationary expectations falling, the RBA has no justification left for holding to its elevated interest rates. Using the RBA’s own logic, interest rates should now be cut.

Read more

The Case of the Missing Report – Part 1

This blog post is a long time in gestation and I could have written in 2009 which is the relevant year of the events that I will document in this two-part series. My conversations with government officials during my working trip to the Philippines last week highlighted several things, including their sheer terror of IMF intervention and the ratings agency. I will write separately about that in a later post. But the IMF watches these types of nations like a hawk and is ready to pounce to enforce their authority at the slightest departure from the neoliberal macroeconomic policy line. As long as these types of nations concede to the IMF bullying they have very little hope of developing towards being advanced states. And IMF bullying is what this blog post is about. This is Part 1 of a two-part story that might be summarised as the ‘Case of the Missing Report’. I will solve the mystery in Part 2, which will be published on Thursday of this week.

Read more

Field trip to the Philippines – Report

I have been working in Manila this week as part of a ‘knowledge sharing forum’ at the House of Representatives which was termed ‘Pathways to Progress Transforming the Philippine Economy’ that was run by the Congressional Policy and Budget Research Department, attached to the Congress (Government). I am also giving a presentation at De La Salle University on rogue monetary policy. It has been a very interesting week and I came in contact with several senior government officials and learned a lot about the way they think and do their daily jobs. I Hope the interactions (knowledge sharing) shifted their thinking a little and reorient to some extent the way they construct fiscal policy. This blog post reports (as far as I can given confidentiality) what went on at the Congress.

Read more

ECB research shows that interest rate hikes push up rents and damage low-income families

I have been arguing throughout this latest inflationary episode that the central bank rate hikes were actually introducing inflationary pressures through a number of channels, the most notable one in the Australian context being the rental component in the Consumer Price Index. The RBA has categorically denied this perversity in their policy approach, and, instead, claimed the rapidly escalating rental inflation was the result of a tight rental market, end of story. Well the rental market is tight, mostly due to the massive cutbacks in government investment in social housing over the last few decades. But the rental hikes followed the RBA rate hikes and the simple reason is that landlords when in a tight market will always pass on the costs of their investment mortgages to the tenants. They weren’t doing that before the rate hikes. A recent ECB research report – How tightening mortgage credit raises rents and increases inequality in the housing market (published January 16, 2025) – provides some robust evidence which supports my argument. That is what this blog post is about.

Read more

Australian labour market – employment continues to grow but it is all in part-time jobs – unemployment up a tick

Today (January 16, 2025), the Australian Bureau of Statistics released the latest – Labour Force, Australia – for December 2024. Employment growth was relatively strong but concentrated on part-time employment, which suggests the quality of employment fell. Employment growth was also unable to keep pace with the underlying population growth and the rising participation rate and as a result the unemployment rate rose by a point. We should not disregard the fact that there is still close to 10 per cent of the working age population (over 1.5 million people) who are available and willing but cannot find enough work – either unemployed or underemployed and that proportion is increasing. Australia is not near full employment despite the claims by the mainstream commentators and it is hard to characterise this as a ‘tight’ labour market.

Read more

Fake news is not just the practise of the Right

The daily nonsense that economics journalists pump out in search of sales for their newspapers is nothing new and one would think I would be inured to it by now. But I still am amazed how the same old lies are peddled when the empirical world runs counter to the narratives. I know that the research in psychology has found that people save time by using ‘mental shortcuts’ in order to understand the world around them. Propositions that we ride with are rarely scrutinised in depth to test their veracity. Rules of thumb are commonly deployed to navigate the external world. And we are highly influenced by the concept of the ‘expert’ who has a PhD or something and talks a language we don’t really understand but attribute an authority to it. In the field of economics these tendencies are endemic. We are told, for example, that the Ivy league universities in the US or that Oxbridge in the UK, are where the elite of knowledge accumulation resides. So an economist from Harvard carries weight, whereas another economist from some state college somewhere is ignored. And once we start believing something, confirmation bias sets in and we ignore the empirical world and perspectives that differ from our own. The consequences of this capacity to believe things that are simply untrue his one of the reasons our human civilisation is failing and major catastrophes like the LA fires are increasingly being faced.

Read more

Shifts in societal attitudes towards well-being mean that a degrowth strategy does not necessarily have to be political suicide

At the end of World War 2, the Western nations were beset with paranoia about what the USSR might be planning. The West had essentially relied on the Soviet armed forces to defeat the Nazis through their efforts on the Eastern front, after Hitler had launched – Operation Barbarossa – which effectively ended the – Molotov–Ribbentrop Pact – signed in 1939 between Germany and the USSR. Following the War, the ‘spectre of Communism’ drove the Western political leaders to embrace social democracy and introduce policies that created the mass-consuming middle class in most countries, which was seen as a bulwark against the development of a revolutionary working class movement and any further spread of Communism. While the interests of capital hated the welfare state and the rise of trade unions, they saw these developments as a means to protect their hegemony in the new world and the uncertainty that the – Cold War – engendered. Mass consumption was akin to Marx’s claims about religion being the ‘opium of the people’ and it has been a dominant part of life in advanced nations in the Post War period. It is one of the reasons that people think a degrowth strategy can never be embraced by the political class because it would confront a population besotted with material accumulation and consumption. However, research from Japan suggests that a strategy designed to reduce material consumption will not “reduce individual happiness and collective wellbeing” (Source) and a decoupling between growth and human happiness is indeed possible, which means the political class, if they are courageous enough, can introduce policies that promote degrowth.

Read more

Underlying inflation in Australia continues to decline

Today (November 27, 2024), the Australian Bureau of Statistics (ABS) released the latest – Monthly Consumer Price Index Indicator – for November 2024, which showed that the annual underlying inflation rate, which excludes volatile items continues to fall – from 3.5 per cent to 3.2 per cent. The overall CPI rate (including the volatile items) rose slightly from 2.1 per cent to 2.3 per cent, but that was mostly due to the timing of government electricity rebates between October and November. In other words, the slight rise cannot be interpreted as signalling a renewed inflationary spiral is underway. All the indicators are suggesting inflation is declining and the major drivers are abating. The overall rate has been at the lower end of the RBA’s inflation targetting range (2 to 3 per cent) for four successive months now, yet the RBA continues to claim they fear a wages breakout and that unemployment needs to increase. The RBA has gone rogue and its public statements bear little relationship with reality. It is clear that the residual inflationary drivers are not the result of excess demand but rather reflect transitory factors like weather events, institutionally-driven price adjustments (such as indexation arrangements), and abuse of anti-competitive, corporate power. The general conclusion is that the global factors that drove the inflationary pressures have largely resolved and that the outlook for inflation is for continued decline. There is also evidence that the RBA has caused some of the persistence in the inflation rate through the impact of the interest rate hikes on business costs and rental accommodation.

Read more
Back To Top