The trouble with the way the media report developments in the labour market from one month to the next is that we don't get a sense of the major shifts that occur over time.
So today let's take a much longer view, examining the trends over, say, the two decades from 1993 to 2013. We'll do so with help from an article by Professors Roger Wilkins and Mark Wooden, of the Melbourne Institute, published in the latest issue of...
Saturday, February 21, 2015
Wednesday, February 18, 2015
It helps to know how to save
The great middle-class virtue is the ability to delay gratification. We could spend all our money now, but wouldn't we be better off if we saved some of it for the future?
We could take the best job we can get as soon as we're old enough to leave school, but wouldn't it be better to stay on in education and eventually get a more highly paid and satisfying job?
Research confirms that the better you are at controlling your natural...
Monday, February 16, 2015
Don't fix the budget while the economy is weak
We are hearing a lot of muddled thinking about how the Liberal Party's leadership ructions affect the budget and the economy, much of it coming from business people. For the sake of their businesses, they need to think more clearly.
There must be some truth to the idea that the political uncertainly is adding to the lack of business confidence, but the contention it's a big factor is dubious. "Confidence" is such an...
Saturday, February 14, 2015
How cutting interest rates affects demand and inflation
Although many people have their doubts, the Reserve Bank cut interest rates last week believing it would help the economy grow faster and reduce unemployment. But how exactly is this meant to work?
Monetary economists believe interest rates affect the strength of demand (spending) in the economy via several "channels" or mechanisms. Eventually the effect on demand affects the degree of pressure for higher prices.
As we...
Wednesday, February 11, 2015
How to get yourself more time
Had a little too much politics of late? Much prefer an earnest discussion about why we're having so much trouble getting the economy moving? No, I thought not. Let's change the subject. Let's talk about time.
Do
you spend much time thinking about time? Most of us spend a lot of time
thinking how little time we have, but that's not the same thing. We
spend little time actually thinking about time, which I'm coming to
think...
Monday, February 9, 2015
Worried officials opt for risky strategy
My guess is the Reserve Bank is a lot more worried about the weak
state of the economy than it's prepared to admit in its soothing words
and the small downgrade to its growth forecast.
That's the only explanation I can think of for its decision
to cut the official cash rate by 0.25 percentage points last week,
despite governor Glenn Stevens' most recent "forward guidance" that "the
most prudent course is likely...
Saturday, February 7, 2015
Privatisation: neither very good nor very bad
The era of privatising government-owned businesses is pretty much
done and dusted, but two governments have dragged their feet, making
opposition to their efforts to complete their privatisation programs a
key issue in the Queensland election last week and the NSW election next
month.
Voters have always disapproved of privatisation, but that
hasn't stopped a lot of it happening. Particularly in recent years,
however, voters'...
Wednesday, February 4, 2015
Voter volatility caused by politicians' bad behaviour
The latest political excitements in Queensland and Canberra leave a lot more at stake than the future of Tony Abbott and the fortunes of the Coalition. They show the rules have changed in Australian politics, with lessons for politicians on both sides.
What's important for the good government of the country and the economy, however, is that the pollies draw the right conclusions.
Abbott's ministers are right to conclude that...
Monday, February 2, 2015
Economists shouldn’t be apologists for business
As the nation's economists gird their loins for a year of furious
debate over economic management and reform, there's a soul-searching
question they need to face.
This year's policy agenda will be dominated by economic
issues. First is what's to be done about what wasn't done last year: the
failure to get the budget on a credible course towards eliminating the
structural deficit.
...
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