FYI Strategic Economics, the new Year 12 Textbook, is available for purchase. See for further information.
NEWS IS NOW TAGGED UP STORIES ON A BLOG
Up to date news stories, tagged according to topic and sub topic for easier review, is now available at http://matthewparsons.com/econews
Budget, budget, election, go
- Overview of budget pdf from Treasury
- Gittins - Budget does the right thing for the wrong reasons
- Janda from ABC on the time bomb of those tax cuts in the future
- ABC's resources on the budget, the back in black...... winners and losers
- Peter Costello doesn't think voters will back surplus and tax cuts in the never never
- Unemployment - 5% latest ABS december 2018
- Inflation - 1.8% latest for the December 2018 Quarter
- MYEFO - must read here - particularly for the revenue update and surplus projections pdf download
- mining investment - the mining companies are beginning to commence some new projests for the first time since the peak of the investment boom ABC news
- Exchange rate - some suggest may be headed to 60 cents this year ABC news
- Monetary policy - evenly balanced between going up and going down - must read Lowe Speech.transcript
- Global economy - must read gold from Lagarde at the IMF with a good historical overview of the multilateral institutional framework Transcript from the IMF
- Global economy - excellent report from the World Bank Global Economic Prospects - Darkening Skies
Unemployment down to NAIRU
Excellent must read RBA speach by Guy Debelle
Excellent must read analysis of final budget outcome for 2018 - see Budget website for PBO analysis
Well ScoMo had the third budget tonight, which gave back half the tax uplift from the commodities price bounce and the end of tax losses being used up by corporates from the GFC. A contractionary budget, with a small surplus (wafer thin) a year earlier, but trying to lock in tax cuts even beyond the estimates and projections in the budget documents!
Some key reading
- Budget overview pdf - key numbers and look at the tables at the end
- ABC interactive to explore all the revenue and spending elements
- Gittins: this budget is too good to be true
- Peter Martin - this is a budget assuming the good times continue to roll....
- ABC full budget coverage launch point
- Peter Hartcher of the SMH
- Michael Janda - migration required for the 3% growth assumptions
- Ian Verrender: budget is about politics, and a ticking time bomb (those 140b worth of tax cuts....)
- Annabelle Crabbe - excellent thought - by only spending half of the revenue uplift over the next 5 years it leaves half of that available to fund election promises - especially since the government risks Labour having a larger spending chest as a result of their proposals to increase taxes
In more mundance news around the traps
- the RBA has left the target cash rate at 1.5% and signalled no likely move in the medium term, and the move when it occurs is likely up (anyone surprised?)
- unemployment stays at 5.5% in Mar (Feb got adjusted to 5.5%) - so we do have record jobs growth, but record low wages growth
- BOGS up to $1.5b surpluls in March ABS
I am hard at work on the 2019 HSC textbook which will be available for Term 4. If you are interested in this one, do drop me an email!
Some recent readings for teachers and students from around the world
- Topic 1, protection: some good thoughts on the Trump tarriffs from the ABC
- Topic 1, blocs: from the ABC, has ASEAN outlived its usefullness
- Topic 3, 4 labour market: with the boom in non mining construction and healthcare jobs, Martin notes that there are now 10 unemployed for every 3 vacancies
- Topic 3, economic growth: an easy way to have economic growth, but not increase in GDP per cap - is immigration (Gittins in the SMH
- Topic 3, income distribution: Gittins chimes on considering whether out current social welfare payments approach is working
- Topic 4, micro: a good reflection from Gittins on why competition may not be everything it is cracked up to be
- Topic 4 fiscal policy, with the Turnbull/Morrison focus on the tax cuts, Gittins wonders why we are effectively giving multinationals a tax break, and Peter Martin crunches the numbers and they look very very moderate after 10-20 years
Some absolute gold has been published recently by the IMF in relation to Australia - read the originals as well as the Gittins commentary.
- Article IV consultation paper in relation to Australia IMF report
- Selected issues paper which includes outstanding articles on BOP movements and Australia's linkages with China Selected issues report
- Gittins does the summary of the IMF BOP article SMH article
- Gittins on the IMF view on Australia's foreign debt SMH article
Some economic news as a distraction from the politics in Canberra.
- RBA gold: Phil Lowe opens the year with an excellent speech with some history, and an outlook and challenge examination for the year ahead. Must read for students
- Banking royal commission - strong piece from the ABC providing background and details on how we got here
- productivity and the exports story - a good overview of the last 12 months from the ABC
- Inflation - good piece from the ABC on the different demographic impacts of current inflation environment in Australia
- Protectionism some relevant material for Topic 1 and Topic 2. excellent Productivity Commission piece: Rising Protectionism: Challenges, threats and opportunities for Australia and a rare, joint publication of IMF, World Bank and WTO Making Trade an Engine of Growth for All: The Case for Trade - IMF, WTO, World Bank
- WTO and the US holding it hostage - excellent piece from the Economist to develop effectiveness essays in relation to the WTO
- A good overview of the current state and path of the Brasil economy
- environment: from the FT, the rainforest pays for the economic downturn
- external stability and economic growth: the Brasil economy depends on commodity prices
Welcome back to the new school year! 2018
Some interesting times across the holidays - below is a range of resources clustered somewhat by Topic for teachers and Year 12 students to brush off the cobwebs.
- World trade - good analysis from the BBC on the Trump effect on world trade and growth and a UK Telegraph analysis of poor global political leadership being saved by central banks
- Venzuela continues as the poster child example for an external stability crisis and hyperinflation, and announced elections today
- Davos rolls around, the IMF forecasts greater short term global growth on the back of the Trump tax cuts but the World Bank forecasts a decade of gloom
- Global protection Trump lifts tariffs to protect local industries with China and other countries considering involving the WTO
- Global growth risks - the OECD expresses concern about global debt buildup and asset prices following extreme monetary policy measures and real concerns about complacency
- Brasil update a good update from Bloomberg on the political and economic envirionment in Brasil and Brasil is expected to return to growth above 2% in 2018
- Global monetary policy - excellent piece on the risks associated with the ultra low interest rate response to the GFC
- new life breathed into the TPP without the US - the TPP resurrected from the ABC
- the Australian dollar moves up to 80 US cents on the back of political uncertainty in the US
- Services trade - good piece on the tourism relationship between Australia and Japan
- Impact of protection policies of other countries - good piece on the impact of India increasing tariffs on some Australian agriculture exports
Topics 3 & 4 - Issues and policies
- unemploymentAustralia continues to add jobs to the economy, with the unemployment rate staying at 5.4%. Good analysis of what's driving the jobs growth
- inflation and the cash rate the RBA continues to keep the target cash rate at the record low of 1.5%
- inflation - from the SMH, how technology is keeping a lid on inflation
- fiscal policy MYEFO update the 2017/18 budget deficit improves (per MYEFO) as a result of the bounce in commodity prices and a slower rollout of the NDIS. Pascoe analysis Good read of Gittins where Keynesian is not a dirty word
- Fiscal policy - Gittins says we'd be mugs to lower our company tax - good analysis
- monetary policy - good analysis on direction of interest rates, why interest rates are likely to rise in 2018
- labour markets a continuation of the trend away from enterprise agreements to reduce worker entitlements by reverting to awards, which may actually be one of the causes of the low wage growth. Also see the analysis from the ABC on causes of the low wages growth
- political constraints on micro good anaylsis of political donations from the ABC online
- Environment policy - good SMH piece considering the current status and honesty of Australia's climate policy
- Economic growth - the SMH is calling 2018 the end of the resources boom which will see a decrease in the value of mining exports
- Economic growth what the Trump tax cut means for Australia
- Economic development good analysis of recent trends and forecasts for Australia's GDP per cap from the ABC
Some economic news worth a read
- Excellent speech from Lowe with a summary of current trends. Must read. and also consider Gittins analysis of the speech
With the HSC done and dusted, some observations first, and then some news from around the economic world.
First the 2017 exam, and some observations and thoughts
- less predictable the perspective to make exams less predictable influenced this paper, as well as influencing the Business Studies paper. Less predictable can mean departing from a pattern of question frequency, combining cross topic elements, and less anchoring to learn to constructs in the formulation of extended response questions
- no graphs... graph models (ie protection graphs, ADAS, Phillips, Lorenz or foreign exchange graphs) were not present in section 1 and section 2 of the paper. At all. Departure from 2016 (3 graphs), 2015 (2 graphs), 2014 (2 graphs), 2013 (3 graphs)
- no tables in MC answers for the last couple of years several questions have had answers in a tabular layout to decrease reading difficulty (apparantly), ie 2013 (9), 2014 (8), 2015 (5), 2016 (3), 2017 (0)
- 2 MC questions on one content area again in the unpredictable space, q2 and q18 both addressed public goods
- less predictable some different formulations in multiple choice from what had been seen previously - with the message that one needs to consider novel/different ways for content to be assessed rather than track the modality and approaches of past papers. For example consider
- q5 (not directly indicating micro reform but referencing AS increase),
- q12 (an ordering question in relation to income shares, with four elements in each option),
- q15 (select the year in which the calculation answer is x),
- q17 (net errors and omissions, rather than core BOP items, being used analytically),
- q19 (algebra elements in table formulation of a multiplier question),
- q20 (exchange rate question mixing USD per AUD, and AUD per USD). Moral of the story, in internal assessment consider crafting different/not previously seen methods of examining the content
- comments on shorts and essays to following
And in economic news
- cash rate what a surprise, stayed the same on Melbourne Cup day. Unchanged since August 2016
- Gold RBA speech Excellent anaylsis of MIB and the current rebalanciing. Must read transcript
- growth outlook some useful reading in the ABC analysis of the latest RBA Statement on Monetary Policy | RBA Statement
Some interesting things happening after a quiet 2 weeks on the economic news and policy front:
- Fiscal policy excellent piece, a little retrospective, but engages with the question of the extent to which (small) the Fed Fiscal policy has been responsible for the period of uninterupted growth SMH
- Fiscal latest Treasury speech on Australia's Economic and Fiscal Outlook
- Fiscal and political constraint Turnbull's uni funding cuts killed in Senate and company tax cut also in trouble
- Environment policy we have no clean energy target but a NEG. so what's a NEG? | SMH
- Issues > Inflation inflation for Sep qtr in and yearly inflation down from 1.9% to 1.8% due to offset reduced grocery prices and increased electricity prices ABS 6401 | ABC online
- Issues > unemployment and Policy > Labour Markets Note there has been a significant reduction in the proportion of employees on EAs compared to awards, as companies try to reduce costs by negotiating lower pay and conditions or let EAs terminate and employees revert to lower award conditions. SMH Woolworths article | background
- Policy climate Treasury Sec John Fraser warns banks and households in relation to debt buildup and the risk with interest rate moves given historically low wages growth SMH
- Policy Major new 5 yearly Productivity Commission Report to pair with the Intergenerational Report in relation to economic reform and productivity. Summary at SMH, report at Shifting the Dial - Productivity Commission, but note that it also recommends a carbon price and is critial of current environment policy
- External stability - exports China's pollution crack down sees industries close for periods with adverse implications for iron ore and coal exports SMH
- Wages growth, wages growth, where for art thou wages growth? with the return to surplus conditioned upon bracket creep as a result of wages growth, and the RBA concerned about household consumption and debt servicing with record low wages growth it is becoming a front of mind policy issue SMH - government holding its breath over wages growth, are wage rises coming?
- Unemployment lowers to 5.5% in September, just above the NAIRU, but where is the wages growth pressure? ABS 6202, SMH | where the new jobs are - SMH
- Minimum wage, what minimum wage? interesting piece in relation to the number of people in Australia for whom the national minimum wage is not a lived reality SMH
- External stability crisis a current example with Venezuela - must read
- IMF and wages growth IMF is beginning to get concerned about low global wages growth and would you believe are recommended MORE government intervention in the market and an increase in minimum wages
- The passing of Holden need to note the impact of tariff cuts, subsidy uncertainty, and the impact of the high AUG during MIB ABC online | News.com | Historical piece from ABC | CNN | worker perspective
Welcome to the new HSC year! Here's a roundup of worthwhile reading both for HSC 2017 and HSC 2018.
- Fiscal Policy 2016/17 budget comes in below original expectations with slower spending on NDIS and social welfare - 2% of GDP ABC online
- Monetary Policy stays at 1.5% in October. Lowe speech - the next chapter.
- Environment Looks like the government is on track to move away from the RET and not adopt recommendation 50 from Finkel SMH
- Topic 1 worthy reading are the latest World Trade Statistics and the World Trade Report 2017. The first doc has some excellent overall stats for essay contexts.
- Topic 1 - Brasil An excellent overview and update on the Brasil Economy and a political counterpoint to consider in the mix
- Topic 2 - Australia's protection An excellent overview of the history and closure of the Australian car industry
- Topic 2 - Australia's trade pattern and CAD an excellent overview from an economist at Austrade
- Topc 2 - CAD numbers are in for the June quarter, which was a worse outcome doubling to $10b, but review the factors ABC online
- Topic 2 - FX Ian Verrender says the AUD is headed for a fall ABC online
- Gittins has been busy several worth a read, including the impact of migration on economic growth, where the jobs growth is coming from - business services, the failure of micro reform in the electricity sector, a retrospective on 10 years on from the GFC, and a perspective on populism, protectionism and Andrew Leigh's new book
- Neoliberalism and globalisation a thoughtful Time piece on global institutions moving away somewhat from the neoliberal agenda, and also checkout The Conversations excellent resource portal - Globalisation under pressure
Well it's the downhill stretch post trials, time to get some good reading in to access those high marks, and here is a selection. Note that the domestic economic agenda is not exactly white hot at the moment with the possibly unconstitutional same sex marriage vote, and the possibly unconstitutionally elected parliamentarians.....
- Micro > productivity all that anxiety about low labour productivity growth is actually down to the wash through of the mining investment boom. Who knew.... Gittins on productivity
- Time for leadership - absolute gold satirical piece on what the Treasurer should do - take a break and let someone else sort the mess
- Labour market Fair Work Commission rejects an Enterprise Agreement | also see Gittins reality check on what is happening with apprenticeships
- Policy gold ABC fact check on the impact of the mining investment boom on macro policy response to the boom must read gold star
- Policy contraints excellent piece on the rent seeking lobbying pressures on the government
- Globalisation and policy responses the next challege for central banks is what to do with the massive expansion of central bank balance sheets
- ASEAN a good piece on the current effectiveness and impact of ASEAN
Brasil update resources
- Financial Times on Brasil and the crisis of the liberal world order
- Only promises of improvement keep Temer in power
Interesting Year 11 financial markets regulation
Some interesting reading to sharpen the mind towards the end of the course and the HSC
- Global economy excellent overall perspective piece from The Economist in relation to changes and trends in the global economy
- RBA monetary policy on hold retaining the record low 1.5% set in August 2016. Checkout the latest Quarterly Statement on Monetary Policy
- RBA education resources the RBA are investing in these again directed towards high schools, with some short publications and also film of the recent day at the RBA for economics teachers. Be sure to check them out at the RBA Education tab on their website These are going to be added to over time.
- Global economy the BRICs are dead - time for a new acronym of the the TICKS. Excellent FT article
- Brasil excellent overview from EY with some good summary material in terms of the policy settings and outcomes in the former BRIC EY publication Also see the excellent update from The Conversation Further information can be obtained by Googling Santander's economic briefs which are excellent.
Some things to take a look at one the run in to trials
- Inflation numbers out yesterday have inflation at 1.9 headline and underlying 1.8%. ABC coverage | SMH | SMH - the forecasters got it wring
- Monetary policy excellent speech again from the RBA Governor yesterday The RBA and Monetary Policy
- exchange rates and international competitiveness with the AUD breaking 80%, that slows net exports little, increases imports, slows the economy, which makes it more difficult for the RBA to return to their announced long term neutral level of interest rates. SMH coverage on the currency
- mining export boom after the mining investment booms, we are now entering the mining export boom. Check out the huge floating LNG platform worlds largest FLNG in Australia
- Eurozone update Greece moves to a new bond issue - first since the crisis Guardian coverage
- Inequality and the pendulum swing away from new liberalism Shorten positions Labor to focus on inequality movement at next election SMH article. ScoMo replied that no problem here, but oLowe in the speech yesterday acknowledge that income inequality, in the long term, had worsened in Australia. Gittins on the neoliberal demise
A news update - been out of action with shoulder surgery, but here's a selection around the world leading into the trials
- Up goes the AUD two year years on the back of no US interest rate rise, China growth, and the RBA musings about the future interest rate. However, will drag on tourism
- Monetary policy good summary of why the RBA can't raise interest rates
- Monetary policy since it can't get growth at the moment, Lowe reckons the path to growth is workers negotiating for a pay rise. Wonderful stuff, particularly since cuts were recently made to penalty rates for some of our low income earners.... more reporting | but checkout the trend in the labour share of GDP
- Fiscal policy Analysis from the Parliamentary Budget Office confirms what we know: it can only be bracket creep and increased tax take that gets back o surplus
- Fiscal policy: government debt surges past 500b
- CAD a return to some Keating analysis and a reflection on the current level of CAD and note the rebound recently in both the CAD and the AUD
- Globalisation and income inequality how the G20 failed our youth as globalisation, deregulation and technology alienates workers
- Globalisation and protection good analysis of the changes in non tariff protection and impacts on Australia
- Globalisation and disquiet good leadership analysis in relation to themes underpinning Trump and BREXIT
- Globalisation - the post GFC debt overhang and asset bubble good analysis of the impact of the current debt overhang globally
- Australia economic growth somewhat fuelled by population numbers but GDP per income stalled
- Micro constraints good Gittins piece on how the way was lost on reform
- Brasil - wow an excellent update and note that Lula was recently convicted on corruption charges, and current PM Temer is also on charges.
- Australia's financial flows update from speech by Guy Debelle, Deputy Governor RBA
- Globalisation and the next bust excellent Verrender piece on bubble caused by the record low global interest rates and the looming correction
News on the environment, and lower unemployment (6-18 months after target cash rate dropped to record low of 1.5% in August 2016....)
- Unemployment for May drops to 5.5%: ABC online | SMH article
- RBA relying on Fed to increase rates, which will depreciate AUD and stimulate economy without RBA cutting rates further
- AD in the Australian economy - low wage growth impacts - excellent ABC piece
- Income distributon - worsening Y dist has an adverse impact on GDP growth - excellent SMH piece
- Monetary policy - excelent overview context piece SMH
- Political contstraint on policy - good analysis of the emerging Turnbull policy positions
- Environment policy - good summary from Peter Martin
- March year GDP data 1.7% - ABC online | ABS summary of contribution elements Note that household saving rate dropped to 4.7% from 5.1% and a buildup in inventories contributed to the 0.3% growth for the quarter.
Contribution to growth 12 months to March 2017
Interesting day with GDP number out later. Other news while you wait!
- Still a CAD, worth a read
- Minimum wage announcement and increase | WA employers unhappy
- RBA leaves rates on hold
Big week this week with CAD and GDP numbers and passing the Netherlands
Some MUST READ resources for all teachers and students reflecting on policy, micro, monetary and fisal in recent history
- Australia takes the record, but recession on the horizon
- Outstanding Bloomberg analysis with video and text
- Record yes, but teetering on low growth. SMH
- Gittins masterclass must read
- The Treasurers through time and an overview: SMH
- Good results and past micro reform led to complacency? SMH
- The eco data out this week: ABC
- Counterpoint: how much of the GDP growth is driven by migration? Maybe consider GDP per person....
- An excellent Shroeders perspective on imbalances in the Australian economy | Consider a good sectoral analysis from AMP Capital
28 May some worthy readings from around the world
- Fiscal policy: excellent Gittins piece on the limitations of Treasury's fiscal balance
- ScoMo becoming a policy disappointment: SMH
- Brasil: now Temer is under investigation | The Conversation | Telesur - excellent piece on globalisation and emerging market economies
- Micro constraints: great analysis of the cut or no cut characterisation of health and education spending
- Globalisation: great piece on China engagement with Sri Lanka
- Income distribution: analysis of the 17/18 budget
- The troubles with the Chinese economy and implications for Australia
- March quarter shows weak wage growth continues
And some post budget musings...
- Wage growth and bracket creep, coupled with new taxes on banks and everyone is the real story in the surplus
- SMH - video, the great political reset - 1:!6 mins
- The magic pudding lives! The impact of the hits are deferred (medicare levy), and education and health neutralised as political issues
- Michael Pascoe - do the numbers - this is not a big infrastructure budget
- Costello muses - does anyone want to pay back debt?
- Political constraint on fiscal policy - a good ABC piece that looks at the voting
Budget night 2017 - another three word phrase. Fairness, opportunity, security
- Budget website
- Link to the 17/18 glossy
- A look inside the budget lockup - great context
- Excellent Verrender analysis - the long time improvement is a deferred medicare whack and heroic assumptions on wages growth and bracket creep
- Budget winners and losers
- Steven Long from the ABC - it's more like a labour budget
- Annabel Crabbe
- Interactive of all revenue and spending
- Outstanding graphical analysis of from Howard to Turnbull - worth a look ABC
- A fair effort from SMH, but it is no Gittins.....
- Nice SMH interactive graphic based on tags of interest
- Grattan on burying the zombie measures from the Hockey 14 debacle
26 Apr 2017
Welcome back to a new term, with lots happening with the budget frolics.
- Morrison seeks to set out good debt and debt - speech later today
- Inflation at 2.1% for the year to March
10 Apr 2017
A roundup of reading for the holidays
- Government intervention excellent Gittins piece on why politicians are addicted to economic success SMH article
- Topic 4: monetary policy why the RBA is stuck between a rock and a hard place. Drop rates to encourage growth, but only to fuel a bousing bubble....ABC online
- Topic 4: micro excellent Gittins piece on where reform has gone. SMH article
- Topic 4: Fiscal policy Why the tax cut will really not deliver jobs and growth ABC online | Gittins on Jobs and Growth
- Topics 2 & 3 - external stability A breakdown of the Australian net foreign debt position SMH article
- Topics 3 & 4 - labour market policy former RBA governor Fraser weighs in on the cut to penalty rates ABC online
- Yr 11: Financial regulation why regulators are losing sleep over the housing bubble ABC online
- Topic 1: international division of labour how China built factories by buying those in the west, dismantling, and then shipping to China SMH article
- Extension: Australia's labour market Gittins explores why it is not quite as simple as price floors when intervening in the labour market SMH article
- Labour market 11 & 12 underempployment is the highest it has been in 40 year SMH analysis
16 Mar 2017
Ok, time for an update with the new unemployment data out, the US raise interest rates, and everyone is cruising into half yearly exams.
- Australia ec growth we are poised to take the record from the Netherlands for the longest run of uninterrupted growth SMH online
- Australian economy Federal Treasurer Morisson on the growth in the Aust economy, penalty rates and low wage growth ABC PM Australia is growing faster than all G7 economies.
- Unemployment Feb 2017 data up to 5.9%. ABC online. Participation rate was steady at 64.6%, and youth unemployment up to 13.3%. | Insecure, stressed, and underemployed: The daily reality for millions of Australians - ABC online | A look at unemployment in the WA in Rockingham - what the young people say
- AD and investment Good piece from Gittins on what the I in AD means - remember, its business investment!
- VCD X Good SMH piece considering whether the bounce in the TOT is sustainable
- VCD X - ag ABC PM reports bumper year for Australian agriculture.
- Globalisation, interest rates, AD and the CAD Consider the links. Fed raises interests rates 0.25%, NAB announces interest rate rise. So, AUD should soften, increase global interest rates puts upward pressure on NPI (both valuation effect and higher interest rates) and slower domestic AD as a result of reduced C and I with the higher domestic interest rates.
- NFD, NFL and AUD lower AUD sees Kaufland, large German retailer, mulling domestic entrance, direct investment, increase capital and financial account surplus and worsen CAD SMH article
- Yr 11 financial regulation: RBA and APRA soon to agree new framework to crackdown on loans to property investors - ABC PM
- Orgs and bodies effectiveness the strange case of the Cambodian war debt, Trump, and the IMF ABC AM | SMH article | Political counterpoint
- Fiscal policy 2017 ABC AM starts to consider what may be in the 2017 budget bag ABC AM | Note that the zombie measures are still in trouble - several billions of dollars - $13.2b.
- OECD on Australia OECD warns about the housing bubble, and also notes concern with the increased inequality in Australia. ABC AM
- Labour market and the role of the FWC With the recent penalty ruling, Turnbull discusses the ruling, the role of the FWC, and sits on the fence ABC AM
- Gov Lowe on current state of global and domestic econony in Opening Statement to the House of Representatives Standing Committee on Economics
10 March - A Brasil update and roundup
- Brasilians suffer as country longs for better days - excellent from the Financial Times
- What really went wrong with Brasil
- Good piece from the Conversation: Facing unemployment, austerity and scandal, Brazil struggles to keep it together
- Excellent overview of the transition of the Brasilian macro economic framework to 2014
- Will the austerity approach in Brasil give confidence to the markets, but reduce GDP growth and ec dev in Brasil?
- An analysis and discussion of the interventionist lurch of the Rouseff administration to chase growth
- Nightmare in Brasil - an interventionist government and bribery scandals have weakened ec growth and ed dev outcomes
- Political counterpoint: Will the Brasil impeachment history ultimately be written as a US coup? | Noam Chomsky
- How Brasil got the worst austerity program in the world
- Brasil is in crisis and once again, the poorest will bear the burden
- Revisiting the 2013 protests - what did they really mean?
- How did Brasil go from BRIC to sinking ship?
1 Mar 2017
Boom - the growth boomer in the December quarter comes in at 1.1% on the back of a jump in the terms of trade, increased export volumes, and increases in household consumption. ABC Online. Annual growth to Dec 16 is a very strong 2.4%. Australia avoids technical recession.
Contributions to growth
28 Feb 2017
Well the term is in full swing, and much happening with BOP data, and with GDP data to be announced tomorrow.
- Topic 2: BOP: December trade numbers are the best in 40 years as the export boom is entered, investment boom almost unwound, and terms of trade on an unexpected turnaround. Absolute must read to understand changes beyond the scope of the textbooks. ABC online | Business Insider Read it again folks, CAD for the Dec 16 quarter was only 0.9% GDP! UBS suggest on way to CA surplus, which CBA suggested back in 2012 as a possible result in this part of the minerals export story.
- More news tomorrow following the GDP update to see if the export kick is enough to keep us out of technical recession.
11 Feb 2017
- Gruen gold Excellent speech by Dr David Gruen, Department of the Prime Minister and Cabinet that elegantly addresses the impact of the mining investment boom, and the process of the rebalancing of the Australian Economy Speech transcript must read | Also read Gittins on the transition that incorporates the Gruen analysis Gittins SMH
- Lowe gold RBA keeps interest rates on hold and Lowe delivers an outstanding speech on the current policy settings, achievements of the Australian economy, and some challenges ahead Speech transcript must read
- Three in a row - the IMF summarises Australia the article IV consultation is just finished, and the IMF document provides a fantastic summary, and example of economics writing, for students and teachers. Download the pdf and enjoy
- Future for the Aust economy Michael Janda of the ABC looks at the tea leaves of the RBA statement on monetary policy ABC online
2 Feb 2017
- Topic 1 Global trade and protection in a post BREXIT and trump world, will the rebuff to globalisation slow global growth? - The Guardian
- Topic 1 Economic development: as inequality has increased in the globalisation era, the IMF CEO has been warning for a while of a need to address inequality or risk a backlash Excellent piece from the Guardian on the IMF view
- Topic 2: Composition of trade Tourism overtakes coal as second largest export earner for Australia following weaker dollar
- Topic 2: Protection policy and structual unemployment The impact of Toyota ceasing operations at Altona
- Topic 2 Trade surplus moves out to record 3.5b in December 2016 on back of higher commodity prices ABC online, SMH
- Topic 2, 3 and 4: Micro reform and protection of the book industry - excellent semi historial and current piece examining the micro reform context Government under pressure from Productivity Commission - SMH
- Topic 2, 3 and 4: Whilst manageable, government debt continues to significantly increase with no fiscal plan in sight beyond relying on bracket creep SMH with excellent graphic
25 January 17
24 January 17 - Happy New Year
Back on deck after 5 weeks in South Africa, Tanzania and Zambia which certainly gives a perspective on economic development and trade negotiations - but more on that later.
We have Trump in the House, Baird depart, the TPP a lame duck, the Aussie dollar firming with concerns over Trump's plans for the USD, and a hard BREXIT with adverse implications for UK and global growth. Challenging and interesting times ahead - at least Australia does not yet have to cope with "alternative facts "."
FIRST UP - A NEW BALANCE OF PAYMENTS RESOURCE
Here is a link to BOPMAN which you can use in class, which is an interactive character based introduction and explanation of the balance of payments. It has visuals, audio, and some activities. I would be very interested to hear your feedback.
More news updates in the coming days folks. I am also in the process of making sure invoices have gone out for 2017.
Holiday news update
- Topic 2: FTAs the demise of the TPP with Trumps's Executive Order - Peter Martin reflects that that may not be a bad thing. Good discussion of the actual export and import impact of Australia's FTAs. Peter Martin
- Topic 3: Exports tourism set to fill the hole left by mining investment ABC online
- Topic 2: Exchange rate whereto the AUD? Trended up on higher commodity prices, and Trump desire for a lower USD, but a global trade war may have negative implications SMH article
- Topic 2: Balance of payments Australia records a trade surplus on the back of higher coal prices ABC online | ABS data
- Topic 1: Brasil excellent WSJ article on the underlying causes of the reversal in Brasil's economic fortunes
- Topic 1: Globalisation excellent piece on globalisation and income inequality from Stiglitz
- All topics: Global growth IMF revises global growth upwards in a Trump era, but warns on protection and volatility ABC online
- Topics 3&4: Economic growth immigration levels have masked Australia's economic decline despite the quarter century of unbroken growth ABC online
- Topics 3&4: Australia The Murphy's law forecast for the Australian economy in 2017 ABC online | Also take a read of Gittins' analysis in relation to the impact of knowledge and rocks on economic growth Gittins
- Topics 3&4: Unemployment ticked up in December to 5.8% ABC online | ABS stats
- Topic 4: Environment policy Australia's environment policy continues to be somewhat messy and evolving, a good summary of current position and what 2017 may hold from the ABC online
- GFC 10 years on a reflection nice piece from the SMH looking back, and considering the continuing implications as nations struggle with growth even 10 years later SMH article
- Trump: bleak economics An analysis of Trumponomics by leading economists SMH
Well results are out, and holidays are in - here's an update from Zanzibar in Tanzania where I am on holiday.
- MYEFO is out, here's the pdf
- Analysis from Peter Martin deconstructs the politics in MYEFO Peter Martin
- Unemployment up to 5.7% in November. Gittins deconstructs participation rates
GDP growth so the number is out, and the number is soft with -0.5% growth for the September quarter, and year to Sep Qtr only 1.8%. ABC online
A big week, with the September quarter GDP numbers due out Wednesday, and with softness in the CAPEX numbers some are beginning to wonder about whether the quarter will be a negative GDP outcome.
Some other articles around the world of interest
- Australian outlook good Verrender piece looking at challenges for the Aust economy and the loomin MYEFO ABC online
- Fiscal policy IMF says Australia should increase infrastructure spending to protect AAA rating ABC online
- Topic 2 - Australia's trade excellent timeline from the government Trade through time timeline
- Australia policy excellent OECD summary of the current Australian policy position and challenges , or just read the pdf
- The vanishing TPP good analysis from Ian Verrender in relation to the TPP failure and its impacts on Australia conclusion is that it won't change anything
- Whither free trade? Despite APEC leaders in Peru promoting free trade, President Elect Trump indicates TPP will be gone day 1. Note that this really opens the door for China in trade negotiations as an unintended consequence. ABC Online | China-sponsored Regional Comprehensive Economic Partnership steps into the gap | China's influence grows SMH
- APEC in Peru Good article and overview with video from Reuters
- Unemployment whilst the unemployment rate remains constant, underemployment looms as a building problem in the Australian labour market ABC online | Good piece with video and case study
- Environment & China an interesting perspective on renewables in China China has passed peak coal consumption
- Holiday reading and reflection 5 economic game changers in 2017 from the SMH
- Monetary policy Good SMH piece on current stance of policy from the Minutes
- IMF on Australia recommendations to increase the spend in infrastructure
- Governor Lowe RBA Good speech in relation to building buffers to weather future shocks
- VCD XM and TOT - what's with the iron ore price recently? good backgrounder from ABC
And its Trump.
- A good piece from Peter Martin on the negative implications for Australia
- Bop and the dollar with a lower AUD, Chinese investment in agricultural and tourism assets increases
Some updates on key stats for the HSC
- More monetary gold superb speech by new Governor Lowe. Must read. Inflation and monetary policy - direct from the horse's mouth!
- Inflation slight rise to 1.3% in the year to 30 September. However, note that underlying remains lower.
- Unemployment slight decline to 5.6%, however markets remain suspicious of data and are looking for longer term trends. ABC online noting participation rate decline | Excellent Ian Verrender analysis of underemployment
- Underlying inflation excellent Martin piece on underlying inflation levels Underlying remains beelow range
Welcome to the new term, and the end run to the HSC
Some interesting things to read
- Monetary policy gold here is the Hansard report of the Lowe speech at the House of Reps Economics Committee. Both the speech, and Lowe's answers to questions, are extremely useful for a deep understanding of the Australian economy and monetary policy PDF of committee
- Fiscal policy RBA pays 3.2b dividend to Canberra SMH - has to help the budget
- Ec growth & Fiscal & External stability Coal price has significant lift, with implications for exports, GDP and the budget SMH
- Effectiveness of fiscal policy questions being asked about the effectiveness of Australia's resource tax regime where massive LNG exports will not contribute to tax revenue for many, many years SMH
- Environment Good summary of the current position of Australian outcomes, Paris and implications ABC online
- Brasil update excellent piece from an Economist on what really what wrong in Brasil, and an excellent updater on current econonic growth and development outcomes Was it all her fault? | And finally, good to see the social programs have not yet been cut Good update
- Brasil IMF concluding statements from latest IMF consulatation on Brasil IMF update, and new Finance Minister statement to the IMF Statement
- Globalisation, trade excellent BBC piece on where we are at with global sentiment on free trade and protection, and the new normal at the tail of the globalisation growth wave BBC analysis: Why is globalisation under attack? | Note also that the WTO has lowered its forecast for global growth as well SMH article | Note that even the OECD are worried about lower global growth, and are recommending fiscal policy, but not in Australia for politicians Gittins laments
- Monetary policy no surprise, Lowe keeps the record low cash rate in his first meeting SMH article
- Ec objectives, and policy excellent must read Gittins piece on the Australian growth experience and the effectiveness of policy Gittins
Some fiscal policy updates, maybe at the bottom of the monetary easing cycle, and thoughts about free trade
- Unemployment down to 5.6% however the participation rate is down ABC online | At a three year low SMH
- Monetary policy SMH comments on a speech by new RBA governor and asks has easing stopped SMH | Importantly, read the speech! Speech transcript
- Constraints on policy Peter Martin looks at the first Turnbull year on policy impacts SMH
- Fiscal policy Omnibus bill delivers 6b in savings over 4 years, passed the Senate last evening SMH
- Economic growth good Gittins overview deconstructing current GDP numbers SMH
- Unemployment Gittins takes a look at youth unemployment in Australia following release of the OECD report. SMH | Also see Jericho's excellent piece about youth opportunity post GFC Guardian
GDP, cash rate, and the departure of Stevens. Some gold in the leadup to the exams
- Annual GDP 3.3% final numbers for 2016 growth has an impressive 3.3%. But note the analysis that suggests timing of some government spending made a large contribution in the June Quarter: ABC online Also read an excellent Gittins breakdown of the numbers
- Stevens AFR interview excellent reading from the transcript of the final AFR interview with outgoing RBA Governor Transcript Also see the Article
- Macro policy levers whilst Stevens has argued monetary policy is not the instrument for growth, Treasury restate their focus on cutting budget spending Treasury Secretary speech in London
- Monetary policy backgrounder excellent overview piece on the players at the RBA in a post Stevens' world ABC online
- Brazil updates | Still a shambles, | Policy returns to neo liberal after the interventionist excursion
Time for a roundup of post trial news as the new parliament kicks off in Canberra.
- Monetary policy as a blunt instrument great piece from Stephen Long in relation to the new two speed economy and the difficulty of the RBA setting one interest rate for the economy ABC online
- Here comes the resources curse Ian Verrender considers the impacts of the resources curse in Australia, and headwinds on the horizon ABC online
- CEDA overview: high quality analysis the economic and political context in Australia in 2016 Overview pdf file
- Protection policy counterpoint: An interesting counterpoint in relation to the impact on the Australian economy of FTA policy, distinct from the unilateral reduction of tariffs in the Hawke/Keating era Economists question FTA upside
- Fiscal policy and BRICs interesting piece in relation to the continuing fiscal challenges for the Australian budget position as a result of multinational tax arrangements Strong Gittins piece in relation to out need for foreign capital, and the political debates in relation to the levels of foreign ownership Gittins SMH
- Inflation targetting in the world of the new normal with the growth imppetus of globalisation retreating, and inflationary pressures abating after 3-4 decades of globalisation, Xenophon wonders whether a singular focus on inflation targetting may no longer be appropriate for the RBA Time for different RBA agreement?
- Unemployment issue and policy Sensational analysis from Jericho in relation to unpacking the apparantly good unemployment outcomes in Australia. Must read The Guardian
- Keen at it again Professor Keen goes early with a prediction of Australian recession, however the article is worth a read and consideration ABC online
- Business investment CAPEX cliff outstanding graph and analysis of the significant drop in overall CAPEX, and the lack of non mining business investment placed in a historical context Business insider
- Monetary policy is the RBA about to join the other central banks in a race to the bottom? Post GFC we avoided unconventional monetary policy the rest of the world adopted as the MIB had not completed - but what now? The Diplomat
- Issue: inequality measuring growth drag as a result of increasing income inequality in the Australian economy SBS online
- Issue: Economic growth Excellent overview article on the rise and fall of growth in the WA economy ABC online
- Monetary and fiscal policy interesting piece in relation to monetary policy, bank behaviour, and the need for growth Business insider
- Globalisation and inequality good update on current trends and overview The Guardian
Glenn Stevens gold must read last speech as an evaluation of the effectiveness of monetary policy in the last 23 years. Transcript of speech
Gittins piles on An interpretation and analysis of the Stevens' position Why Treasury are wrong and we should be borrowing
Inflation lowest in 17 years with year to June 2016 coming in at only 1.0%
A roundup of the interesting news during the holidays looking forward to the third term and trials.
- Unemployment: up to 5.8%, although an increase in full time jobs which is good to see SMH
- Impotence of monetary policy: Fed talks seriously of helicopter money ABC online
- GWP growth sluggish the new normal - has globalisation run out of puff as an agent of above normal growth SMH | Verrender opines on sluggish GWP growth - despite that resolution at the Aust hosted G20 meeting.... ABC online
- Economic objectives remember, GDP growth (economic development) is a different thing to GNI/cap growth (economic development) Must read Greg Jericho piece on decline of disposable incomes
- Balance of payments Services to the rescue! Especially education and tourism SMH | Also see Janda on the link between the potential credit rating downgrade and the current accoutn deficit ABC
Fiscal policy Must read Gittins critique on the Jobs and Growth flim flam of the 2016 budget SMH | Don't forget the IMF analysis of the Howard years Fiscal profligacy | Indeed economists suggest negative gearing would be a better focus than corporate tax cuts Peter Martin
- Economic growth: must read Outstanding examination of the paradox of GDP growth and GNI decline in Australia Business Insider | INdeed the looming challenges for growth and incomes suggest the election win was somewhat of a poison chalice ABC online
- Free trade agreements: the reality of the impact on AD excellent piece by Martin - the story may be more grwoth in imports than exports as a result fo FTAs. Great for consumers, not so much for AD, GDP and employment. Jobs and Growth? Martin
- Australia and the environment Great overall update piece from the SMH
A roundup of the interesting news from the last part of term as holiday and pre trial reading
- BREXIT as the growth engine of globalisation slows, income inequality widens, and a range of jobs disappear, the disaffected are angry and looking for change. Verrender from the ABC | Guardian | is globalisation ending?
- BREXIT and exports good news for Aussie agricultural exporters where Australia can now agree a FTA with the UK, increasing access for a range of products including wine
- Issue: unemployment excellent Jericho backgrounder on current state of play ABC online
- Policy: fiscal/microhow do each party say they will obtain growth, and what is the OECD saying about Australia? ABC Online
- Fiscal policy at what cost the surplus? An excellent analysis of the timing, and preparation for, the next external shock that must be weathered by the Austalian economy ABC online
- Policy: micro Gittins observes that the parties are essentially silent on micro reform, which with declining terms of trade, is the only path to higher economic development Gittins | while we're at it, check in on Gittins thoughts on the new normal SMH. Consider the symmetry between Australia on the tail end of the mining investment boom, and the globe on the tail end of globalisation....
3 June - GDP data good, but GNI......
A roundup of the interesting and worthy...
- 3.1% for year to March enviable GDP growth data our for the year to end March, but be careful - how much of this is GNI growth? Excellent ABC analysis | GDP/GNI - why does it matter
- ABS commentary always worth a read in the National Accounts to review the component contributions to changes in GDP Commentary
- Devil in the detail must read PM piece on getting into the detail on the National Accounts Living standards actually going backwards despite GDP growth
- Micro reform impact of structural change in the Australian economy - excellent AM example in Tasmania Forestry and tourism in Tassie | and wine as well
The election rolls on, GDP data out this week which should be interesting
- Gittins analysis on the plan... the 10 Year Enterprise Tax Plan is not the jobs and growth plan the Government suggests it is. Must read
- Structural deficit great piece on the budget deficit position - the only path back to surplus is on the back of wages growth and bracket creep.... includes a good explanation of the bond auction process
- Gittins on the election good piece on comparing policy positions consider constraints on fiscal policy
- Monetary policy comment on Stevens recent comments in relation to the impact of monetary policy
17 May the budget unpacking...
- Gold: Fiscal policy evaluation: Gittins evaluates the budget against the objectives of efficiency and income distribution Must read SMH
- Trickle down economics this underpins the 10 Year Enterprise Tax plan which is the centre of the budget - but does it work? Ian Verrender thinks not | Another analysis from The Age
- Limits of monetary policy central banks said to be thinking about helicopter money to achieve growth as monetary policy increasingly impotent Helicopter money: central banks give money to governments who give it to citizens
- Fiscal: tax policy Gittins analyses where the funding of the corporate tax cuts actually come from Hardworking Aussies to pay for the company tax cut
- Fiscal policy, labour market and income distribution Govt increasing subsidies in the nanny pilot Budget boosts the subsidy as only 60 families have participated at $35/hr for nannies
- Fiscal policy, labour market The PaTH internship in the budget, an analysis of the detail Jericho from ABC | Some lawyers suggest it may be illegal
- Fiscal policy One thing to consider is the budget assumptions, especially in relation to sustainable long term growth rates. The budget has a return to 3% growth, but is there a new normal emerging at the tail of the high growth globalisation era such that governments cannot rely on those growth rates (and therefore face lower wage growth, and slower bracket creep, impairing the slow march to surplus?). Lowe, RBA governor in waiting on the new normal | Forbes on the new normal | Bank of Canada on the new normal
- Monetary policy and the plan for jobs and growth JP Morgan sees a future cash rate at 1% as monetary policy the only counter cyclical policy tool at the moment ABC online
- Monetary policy power if we are in a low growth environment, do interest rate cuts help, and should the inflation target be lowered? Ex RBA governor Bernie Fraser muses
- Yr 11: financial market regulation Good short video element from SMH on who regulates our banks SMH
8 May new function release
Essay Magic One of the challenges for both students and teachers is in relation to deconstructing essay questions, and then considering what material to include, and how to structure, an essay response. Essay Magic is an interactive tool enabling essay question construction, which then indicates the way in which a response may be approached. This can then form the basis for conversation and discussion, rather than being prescriptive. It also has a break down of past HSC questions by syllabus topic.
8 May news updates
- Brasil micro woes Good short podcast on the policy environment and failings in Brasil Podcast and summary | Also note the developing post boom analysis from the New York Times the failure of micro policy impairs Brasil
- Monetary policy excellent piece from Martin on monetary policy and possibility of further interest rate cuts SMH
- Gittins on budget mandatory reading excellent positioning of the impact of the strange ScoMo budget - impact on ec growth in the short term is pretty much nil Must read article
- Budget: fiscal policy impact on income distribution and growth budget actually sees a reduction in Newstart payments despite both business and unions seeking higher Newstart payments as part of labour market policy Cuts to dole | Annabel Crabb on the ScoMo budget, that's not a budget, that's a plan ABC online | Ian Verrender looks at the delayed march towards a surplus.... ABC online
- About those tax cuts the ten year plan on corporate tax cuts sees a $48b budget impact ABC PM
- About that intern program... an unexpected part of the budget and labour market policy questions raised about internships
- "That's not a fiscal policy" Shorten channels his inner Crocodile Dundee and lays out a very different fiscal policy from the ScoMo meek budget ABC online the Shorten budget in reply speech | Coverage also from the SMH
- Fiscal policy: stepping back to see the bigger picture: excellent Grattan Institute piece taking a look at successive budget projections, and the standard against which fiscal policy should be judged three tests for the budget
4 May the Budget
Key thoughts and resources from a budget that really does not engage with the structural deficit. Don't forget the RBA lowered rates earlier in the day to the lowest cash rate in history, probably more to cool the dollar than an expectation that a 0.25% reduction would have a sigificant anti-deflationary effect.
- Budget overview pdf from the govt
- Martin from the SMH: A budget that calls for faith: budget does scarecely anything to the economy
- Cassidy: the election will be won or lost elsewhere as this budget seeks not to have large impacts in the short term
- Great overview in charts from the ABC
- Interactive from ABC on revenue and expenditure
- Budget Analysis from EY
28 April 2016
Inflation: deflation for the March quarter with inflation running at 1.3% for the year to end March 2016. ABC online
Fiscal policy quite good piece from Michael Pascoe in relation to current interplay between fiscal and monetary policyPascoe article
13 April 2016 wrap up
Well it's been an extraordinary time in a policy vacuum at the moment in Australia before the first Turnbull/ScoMo budget. So much has been on the table, taken off the table, and what remains is anyone's guess for the budget in a couple of weeks. Whilst every economist seems to agree we have a structural budget deficit, the government is determined to avoid tax increases because of political fallout, and they are fast signing on to trickle down economics with a cut to corporate tax rates supposed to increase GDP, increase employment, and therefore increase taxes. Well......
Some holiday reading
- VCD X&M - shifting to food taking advantage of the China FTA, and the process of industrialisation sees food producers on a mission in China AM article
- Impact of Aust protection policy last factory making fridges in Australia closes Electrolux stops making fridges also note that the OECD examines the implications for older workers
- Political constraint on environmental policy Grattan institute sees a future policy setting only when consensus is possible ABC AM
- Labour market unions signal penalty rates key ground for election strategy ABC AM, whilst wants cuts to penalty rates
- Turbull scare campaign the government focusses attention on the oppositions policies PM article
- COAG reject Turnbull' state tax thought bubble a very significant reform for the Federation had a very short shelf life indeed PM report on COAG
- Renewable energy Government announces new fund, but the govt body ARENA shifts from providing grant to seeking equity. PM piece
- That rising dollar Whilst the TOT has fallen, the AUD has recently seen 8 month highs which is somewhat impairing the rebalancing of the economy What can the RBA do? The impact of the lower dollar can be seen in the largest growth in manufacturing in a decade ABC AM. Of course it doesn't help that the ECB has cut central bank rate to zero.
- ScoMo takes personal tax cuts off the table times are different to Howard/Costello in mining investment boom mark 1 ABC PM
Worthy speeches to read
- Stevens: How do we withstand shocks?
- Dep RBA Governor Lowe: Resilience and Ongoing Challenges
- ScoMo Address to the Australian Financial Review Business Summit, Melbourne
- Treasury: the macroeconomic context
- Treasury: global context and touches on role of IMF
25 February 2016
Currency wars the AUD is firming as a result of the better growth numbers, slight rebound in commodities, and a slower tightening cycle in the US. Time for more jaw boning or intervention? ABC currency wars
Monetary policy Even though cash rate is stuck at 2%, banks are tightening arguing that funding sources are more expensive in foreign capital markets and increased risk Stevens assesses the reasons
G20 - effectiveness diminished in non crisis situation since the urgency of the GFC, getting the G20 to agree and drive change becomes more difficult G20 meeting in Beijing rejects stimulus push | FT reports on policy clashes within G20
- OECD Brasil update
- IMF Brasil update
- Congressional Research Service Brasil background
- EU research service paper - good short eco summary in the middle
- The rot at the heart of the Brasil economy
- Brasil stats resource - ecostats
- Rabobank short overview of the Brasilian economy | Short Economist piece
Trade deficit narrows the AUD as a shock absorber continues to assist the rebalancing of the economy with imports reducing and exports increasing. ABC news
18 February 2016
Unemployment up to 6%: lower growth environment sees unemployment rate tick up, although there are concerns in relation to the reliability of the ABS data all the way to the RBA.
Fiscal policy Turnbull and Morrisson rule out any changes to the GST, and the policy debate appears to have shifted to tax cuts in order to promote growth, which will generate taxes, in order to address structural fiscal deficit - sound like a good plan? Excellent analysis of the position
5 February 2016
Trade deficit blows out in January to fourth worst deficit. ABC
29 January 2016
John Fraser (Treasury) speech: The Australian Budget Context
28 January 2016
Welcome back everybody!
So, a range of useful reading to get back into the swing at the start of the year:
- Stevens' speeches (Nov/Dec) excellent for issues and policy
- Dec inflation low but higher than expected ABC online
- Russian economy suffering with the lower oil price BBC overview
- 5 reasons we are not headed for recession SMH article | Also, Gittins advises caution Ignore the gloom: the Australian economy isn't in bad shape
- TPP will barely benefit Australia SMH analysis
19 January 2016
Back from holidays and working through content updates for the last month. Unemployment has stayed the same, Brasil is in deep trouble, the USD strengthens, negatively impacting inflation and growth around the world, China slows, Brasil is in reverse. Standby for a range of goodness as we approach the new year. Matthew.
Happy MYEFO day although not so good news with deficits expanding as a result of softer iron ore prices and very slow wage growth. Numbers are updated on the right. ABC main points: Deficit: $37.4b in 2015-16, $33.7b in 2016-17, $23.0b in 2017-18, $14.2b in 2018-19 Iron ore price: Revised down from US $48 per tonne to US $39 per tonne GDP: Downgraded to 2.5 per cent, growing to 2.75 per cent in 2016-17. Note the downwards revision of the GDP growth forecast. A worthy read of the document for holiday reading.
Good luck everyone for the HSC results tomorrow!
Unemployment down November down to 5.8% from 5.9%. ABC
GDP growth: good news, led by exports, offset by declining private and public sector CAPEX, growth of 0.9% for the quarter, for the year 2.5% ABC news
This week: Sep quarter growth numbers are out - with business investment significantly decling, will be interesting to see the numbers
Two weeks out from MYEEFO and Deloitte's estimates are ugly reading for the government with softer revenues leading to larger budget deficits as far as the eye can see ABC Just In
Tariffs and dumping: protection Australia imposes new tariff on reinforced steel dumped in Australia by Korea, Singapore, Spain and Taiwan. ABC AM
Globalisation: Greece continues to stagnate years of austerity measures and no real hope in sight ABC AM
TPP in a nutshell from the BBC
Latest RBA minutes suggest that slow China growth is likely, commodity prices to remain sluggish, TOT to stay lower, depreciating dollar providing support to non mining exports, including significant growth in services exports being seen in the half year. SMH
Brasil update excellent update on Brasil from The Economist. Economic development may actually go backwards as a result of failure to address micro reform during the good times of the commodities boom. The Economist
Fiscal policy failure and LNG boom a good analysis of the actual tax impact of the massive investment in LNG assets in Australia during the mining investment boom SMH
Net Foreign Liabilities: Global investor conference in Darwin: evidence of the savings investment gap, the reason for high NPI debits and CAD. ABC AM
Gold Stevens speech: Stevens gives an excellent summary of where we are at and the drivers of future growth. Speech transcript
Fiscal policy Gittins notes that the current Federal discussion about tax proceeds on a revenue neutral assumption, which will not close the structural budget deficit SMH article
Environmental sustainability important CSIRO research to know about proving that protecting the environment can coexist with higher levels of economic growth ABC article
Case study Brasil excellent update on the emerging basket case of Brasil Economist article
Cash rate stays at 2%. SMH article
A bit of a wrap up for the start to the year:
- Inflation stays at 1.5% for the year to 30 Sept 2015. Still below the target range, and with retail banks increasing rates some are wondering if the RBA will lower interest rates in November ABC news
- BOP, TOT and X fall in oil, iron ore and coal prices impair Australian exports, worsen BOGS and may worsen CAD PM transcript
- Protection TPP cleared to pass parliament with opposition support PM piece
- AUD global impacts on the AUD: US Fed increasingly likely to increase rates in December sees the AUD softer AFR article. Some see the AUD at 65c by end of year. SMH
With the 2015 HSC done and dusted, best wishes to all for the marking and results.
Renewals will be emailed out to all teacher subscribers. We now have over 60 schools using the site, which is fantastic.
Best wishes to students, and the economy, for the year ahead.
Key things to make sure you check out
Ever wanted to see all the key stats for Australia easily? Read on!
Economic stats app (which you can use on your phones or computer): EcoStats.
Available at http://matthewparsons.com/further/ecostats.shtml.It is a web app, meaning that you must be online to access, and you always see the latest data without having to update the app. When hitting the link on a mobile device, you can then add an icon to your home page for use later (i.e. it is an icon on your phone). Please note that it is accessed from the link, not from the iTunes store, and works for computers, ios and android.
If you click on the visual display (i.e. the balls for each element of economic growth, internal and external stability), graphs are then available for each of the objectives.
If you use the app on a computer, it automatically res to the screen, which is great for projecting in class.
HSC revision questions by topic
Please checkout the revision tool addressing multiple choice and short answer questions from 2014 - 2008 by topic and sub topic within the syllabus. You can review both combined (to see what the distribution of questions were in the paper), or just MC or short answer. These are also obtainable, by subtopic, from within the syllabus tab for the HSC.Visit the trainer now
Previous news stories
Historical Key stats
Numbers are for year ended 30 June (GDP, Budget etc), or as at 30 June (inflation, unemployment etc).
First column is mining investment (%GDP), then economic growth, fiscal policy, GDP, internal stability numbers (unemployment and inflation) and then monetary policy. Note that during MIB1, mildly contractionary fiscal policy and tightening monetary policy to control inflationary pressures caused by mining investment boom (somewhat offset by higher dollar). GFC sees large fiscal policy and supporting monetary policy, With resumption of MIB2, monetary policy tightens, and fiscal becomes contractionary. After peak of mining investment boom, monetary policy is loosened (counter cyclical), however fiscal policy is pro cyclical (ie the stablisiation work is being done by monetary policy).
GDP is Yearly Chain Volume Measure ABS 5206 Table 34.
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Table of key stats
|Economic growth annual||1.8%||Sep 19
|Economic growth qtrly||0.4%||Sep 19
|- Underlying inflation||1.5%||Dec 19|
|- RBA target cash rate||0.75%||Dec 19
|Terms of trade (% change yr||+8%||Sep 19|
|TWI from RBA||58.5||Jan 20|
|Household savings ratio||4.8%||Sep 19|
|Net foreign debt %GDP||59%||Sep 19|
|Net foreign liabilities %GDP||49%||Sep 19
|BOGS %GDP||4.2%||Sep 19|
|NPI %GDP||-2.6%||Sep 19|
|CAD %GDP||-1.6%||Sep 19
Underlying cash outcome %GDP
2019/20 est budget
2020/21 est budget
2021/22 est budget
2022/23 est budget