What COVID-19 means for Australian productivity
I have a piece at the Committee for the Economic Development of Australia blog on the implications of the current pandemic for Australian labour productivity based on my recent report for USSC.
David Uren also writes up my report for the Australian Strategic Policy Institute blog, The Strategist.
posted on 23 April 2020 by skirchner in Economics
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Coronavirus means globalisation has suffered but we must not give up on trade links
I have an op-ed at ABC Online arguing that the current disruptions to the global economy dramatise the hidden benefits of globalisation. We can now see more clearly than ever the extent to which our standard of living depends on integration with the global economy.
posted on 17 April 2020 by skirchner in
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Failure to converge? The Australia-US productivity gap in long-run perspective
I have a new report out with the United States Studies Centre on the Australia-US productivity gap in long-run perspective.
The report discusses the relationship between US and Australian productivity and how the openness of the Australian economy has allowed us to import productivity trends from the global frontier represented by the United States.
A key implication is that the globalisation of the Australian economy is an important determinant of Australian productivity growth. The slower pace of globalisation since the mid-2000s explains the slowdown in productivity growth in ways that competing explanations do not.
The report concludes that re-establishing and improving Australia’s international connectedness must be a priority for Australian policymakers in the aftermath of the pandemic.
posted on 16 April 2020 by skirchner in Free Trade & Protectionism
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My interview with Scott Sumner
My interview with Scott Sumner from the Mercatus Center at George Mason University on monetary and fiscal policy responses to the pandemic, the future of globalisation and his forthcoming book on market monetarism.
posted on 14 April 2020 by skirchner in Economics
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RBA money printer didn’t go brrrr
I’m in USSC’s The45th explaining why the RBA’s money printer didn’t go brrrr.
posted on 25 March 2020 by skirchner in Monetary Policy
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Policy Forum: Macroeconomic Issues in a Changing World
The March 2020 issue of the Australian Economic Review is out, with a Policy Forum including my article on The Effect of Changes in Monetary Policy on Consumer and Business Confidence. Be sure to also read Bruce Preston’s article in the same issue on The Case for Reform of the Reserve Bank of Australia Policy and Communication Strategy. There is a CAMA Working Paper version of Bruce’s article for those without access to the journal.
I’m pleased my paper contributed to the RBA walking back the contention in the November Board minutes that rate cuts hurt confidence. The draft paper was circulated within the Bank by John Simon, which was fitting given that it was essentially an update of his 2001 RBA RDP on the determinants of sentiment. John’s 2001 results hold-up quite well. Bruce’s paper also discusses why the contention in the November Board minutes is incoherent from a strategy and comms perspective.
The final capitulation came when Governor Lowe explicitly rejected the idea that rate cuts hurt confidence in testimony before the House Economics Committee, responding to some very effective questioning by Andrew Leigh.
posted on 28 February 2020 by skirchner in Monetary Policy
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RBA’s foot-dragging leaves economy dangerously exposed
I have an op-ed in the AFR on the lessons from the US experience with monetary policy for the RBA in the wake of yesterday’s official interest rate decision.
posted on 05 February 2020 by skirchner in Monetary Policy
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The evidence suggests Reserve Bank rate cuts don’t hurt confidence
In The Conversation, I round-up the US and Australian evidence on the effect of monetary policy on consumer confidence. There is little evidence for a perverse signalling effect from rate cuts on confidence, contrary to suggestions by the RBA Board.
posted on 04 February 2020 by skirchner in Monetary Policy
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The Effect of Monetary Policy on Consumer and Business Confidence
I have an article forthcoming in the March issue of the Australian Economic Review examining the US and Australian evidence on the effect of monetary policy on consumer and business confidence. It has been suggested that recent reductions in official interest rates might have a perverse signalling effect on consumer and business confidence. But that is not what the US and Australian evidence or my own estimates suggest. While consumers talk their book in relation to expectations for their own finances, when it comes to expectations for the economy as a whole, consumers and business are for the most part clear about rate cuts being expansionary for the economy.
As noted in the article, even if rates cuts did have a perverse signalling effect on confidence, this would not be an argument against monetary easing. It implies that the Reserve Bank should not act on its assessment of the economy, which is likely to be self-defeating.
Shane Wright writes up the paper for the SMH/Age in the context of the January consumer confidence release.
posted on 24 January 2020 by skirchner in Monetary Policy
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US-China trade deal is spin for Trump’s failed protectionism
I have an op-ed in the AFR on the US-China ‘phase one’ trade deal noting its lack of substance in law and economics. To the extent that third parties like Australia are adversely affected by trade diversion, they could mount a case against China at the WTO.
posted on 23 January 2020 by skirchner in Free Trade & Protectionism
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Don’t bank on US dollar demise
I have an op-ed in the AFR arguing that the perennial predictions of the US dollar’s demise reflect a fundamental misunderstanding of the sources of its dominant role in the world economy. The US dollar’s advantages are not easily replicated by putative rivals (text below the fold).
continue reading
posted on 09 January 2020 by skirchner in Financial Markets
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US protectionism a costly failure
I have an op-ed in the AFR explaining why the ‘phase one’ US-China trade deal exemplifies the costly failure of President Trump’s protectionist trade diplomacy.
posted on 17 December 2019 by skirchner in Free Trade & Protectionism
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Now we know. Phil Lowe’s speech on QE
I have a piece in The Conversation on what we learned from Governor Lowe’s speech last night about its prospective approach to QE. As I note in the article, the risk now is that the RBA repeats the US Fed’s mistakes by moving too slowly.
posted on 27 November 2019 by skirchner in Monetary Policy
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The ‘reserve currency’ myth: The US dollar’s current and future role in the world economy
Very long time readers of this blog will know that the future of the US dollar was much debated in these pages in the mid-2000s. I have given these ideas a systematic treatment in a new report for the United States Studies Centre, The ‘reserve currency’ myth: The US dollar’s current and future role in the world economy.
This year, the euro celebrated its 20th anniversary. At the time of its launch at the beginning of 1999, it was widely expected the euro would assume a role equal to that of the US dollar in the international monetary system. Despite some early gains, in net terms, the euro has not increased its share since its inception two decades ago.
The campaign to internationalise the RMB from 2009 has also faltered. Measures of RMB globalisation have gone nowhere since 2016 as China’s communist party has prioritised state control. The inclusion of the RMB in the IMF’s Special Drawing Rights basket was little more than a vanity project.
posted on 11 November 2019 by skirchner in Economics, Financial Markets
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The Treasurer should not let the RBA off the hook so easily
I have an op-ed in the AFR arguing that the Treasurer’s decision to leave its agreement with the RBA unchanged is a missed opportunity to hold the RBA accountable for its recent underperformance against mandate.
Robert Guy has a related piece in the same edition. The headline says it all.
The Treasurer just backed the RBA over what the market is telling us. We will see how that turns out.
continue reading
posted on 06 November 2019 by skirchner in Monetary Policy
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