Comments on Gary Johns "Convoy a revolt of working people" 18/08/2011, http://www.theaustralian.com.au/national-affairs/commentary/convoy-a-revolt-of-working-people/story-e6frgd0x-1226116943715
While what Johns argues may seem reasonable, the same line of argument could/would put the costs of no action on carbon equally large, or they might be even higher.
There are many variables, factors and scenarios that are very difficult to model, as most modellers or people close to modelling works are aware. This may be a double edged sword, and could be used either in favour of the Treasury modelling or against it.
The real issues are whether actions should be taken to mitigate emissions of carbon dioxide, and if the answer is positive, how actions should be taken.
Showing posts with label economic modelling. Show all posts
Showing posts with label economic modelling. Show all posts
2010-05-28
Roskam exposes flaws of Rudd economics
In a featured article in The Australian Financial Review today, 28/05/2010, page 58, John Roskan has an excellent exposition of Rudd's distorted and selective approaches to economics.
Roskam states that Rudd, in his economic essay published in the Monthly in February 2009, went so far in attacking the so called "neo-liberals and their belief in the efficient-market hypothesis", and branded their "economic modelling for causing the global financial crisis".
But now Rudd is using a never tried theoretic modelling involving many assumptions as the basis for his Resource Super Profits Tax.
What Roskam concludes is that "it seems Rudd has no qualms about theoretical models when it's social democrats instead of neo-liberals doing the modelling."
By the way, the AFR editorial, on the same page, is titled: "a way out of the quagmire" and has the following advice to Rudd and Swan and their government:
"The RSPT is nor so neutral after all. Another to dislike the silent partner model is that it merely postpones the risk of fiscal shocks."
"The government needs to examine all these options, and more."
Note: Those options include: Professor Garnaut's suggestion of replacing the RSPT with a version of the petroleum resource rent tax. The "neutral" mentioned above means the Brownian theoretical basis of the RSPT that it does not distorts investment incentives and decisions.
Roskam states that Rudd, in his economic essay published in the Monthly in February 2009, went so far in attacking the so called "neo-liberals and their belief in the efficient-market hypothesis", and branded their "economic modelling for causing the global financial crisis".
But now Rudd is using a never tried theoretic modelling involving many assumptions as the basis for his Resource Super Profits Tax.
What Roskam concludes is that "it seems Rudd has no qualms about theoretical models when it's social democrats instead of neo-liberals doing the modelling."
By the way, the AFR editorial, on the same page, is titled: "a way out of the quagmire" and has the following advice to Rudd and Swan and their government:
"The RSPT is nor so neutral after all. Another to dislike the silent partner model is that it merely postpones the risk of fiscal shocks."
"The government needs to examine all these options, and more."
Note: Those options include: Professor Garnaut's suggestion of replacing the RSPT with a version of the petroleum resource rent tax. The "neutral" mentioned above means the Brownian theoretical basis of the RSPT that it does not distorts investment incentives and decisions.
2010-05-18
Could Treasury modelling be spurious?
Henry uses Treasury modelling. That modelling uses assumptions. Those assumptions would have to be strange, either in long term prices or the share of marginal versus non-marginal mines, to produce the results he is relying on.
In econometrics, there is the term of spurious estimation.
It seems in Treasury modelling, there should be a similar term existing and applying, that is, spurious modelling.
Further, his arguments seem to be confusing. For example, he said "In the last four decades numerous predictions have been made of large scale unemployment and the death of manufacturing, decrying deregulation, decrying tariff cuts and decrying mineral booms," and "The dire predictions of the past have not eventuated, and it's unlikely that similar predictions today will fare any better."
There are reports in the last few days that stated that the government's claim that the PRRT did not affect the growth of the oil and gas industry was wrong and the growth has been from projects that do not have that tax.
So what henry is talking about? Why does he use facts, if he has, to counter those reports?
See below for Henry's arguments.
http://www.abc.net.au/news/stories/2010/05/18/2902825.htm?section=justin
In econometrics, there is the term of spurious estimation.
It seems in Treasury modelling, there should be a similar term existing and applying, that is, spurious modelling.
Further, his arguments seem to be confusing. For example, he said "In the last four decades numerous predictions have been made of large scale unemployment and the death of manufacturing, decrying deregulation, decrying tariff cuts and decrying mineral booms," and "The dire predictions of the past have not eventuated, and it's unlikely that similar predictions today will fare any better."
There are reports in the last few days that stated that the government's claim that the PRRT did not affect the growth of the oil and gas industry was wrong and the growth has been from projects that do not have that tax.
So what henry is talking about? Why does he use facts, if he has, to counter those reports?
See below for Henry's arguments.
http://www.abc.net.au/news/stories/2010/05/18/2902825.htm?section=justin
2009-08-13
Leave politics aside and examine the Frontier Economics modelling
Comments on Lenore Taylor “Business wary of $1.3bn black hole”, 13/08/2009, http://www.theaustralian.news.com.au/business/story/0,28124,25921906-5018012,00.html
The Frontier Economics modelling and result deserve a careful analysis and investigation by other credible modelling agencies, including the Treasury, to see if it was done correctly.
It presents very good result, lower costs and higher reduction. But one needs to make sure it is not "too good to be true". I hope it was done correctly, but I am cautious.
Political persuasions of all sides need to be seriously examining that modelling. Politics should give way to national interest on this important economic issue that will have long term and very significant bearing on Australians’ well being.
The Frontier Economics modelling and result deserve a careful analysis and investigation by other credible modelling agencies, including the Treasury, to see if it was done correctly.
It presents very good result, lower costs and higher reduction. But one needs to make sure it is not "too good to be true". I hope it was done correctly, but I am cautious.
Political persuasions of all sides need to be seriously examining that modelling. Politics should give way to national interest on this important economic issue that will have long term and very significant bearing on Australians’ well being.
2009-06-16
Understanding economic modelling and forecasting - be realistic about it
Comments on Lenore Taylor “Job forecasting a model for success”, 16/06/2009, http://www.theaustralian.news.com.au/story/0,25197,25642571-5017906,00.html
Economic model of forecasting of one type or another is no more than assumptions used in it. Most models are long run general equilibrium model. How many jobs will be lost or gained largely depends on the assumptions of wage flexibility.
In the short run, most modellers assume some sort of wage rigidity, so any perturbations like the ETS will cause job losses. In the long run, wage growth will be slower to resume full employment or near full employment. One does not need to be a modeller to know the results of ETS without renewable energies.
With renewable energies, more opportunities are generated to employ more labour. That is for sure, but it says little about the underlying welfare situation. Further, how many jobs will be created will depend on the quantity of those assumed renewable energies and the labour intensity of each of them.
The point is that whether it is short term job losses, or job absorption by renewable, they all depend on assumptions used. And those assumptions are based on the current labour intensities and the assumed future labour intensities. In the long term, there is no job impact, because people/labour will adjust to any future situations.
In some sense, it is meaningless to talk about job losses or gains of one sector or at one time, under one particular scenario. There are always other balancing factors working to offset that. One needs to be realistic about modelling and results from modelling.
Once one understands how models work and how modellers work, it is not too difficult to understand their results. Nevertheless, having models is much better than having no models, and that is why modellers or forecasters are the beneficiaries of any debates involving economic consequences, such as employment and welfare.
Economic model of forecasting of one type or another is no more than assumptions used in it. Most models are long run general equilibrium model. How many jobs will be lost or gained largely depends on the assumptions of wage flexibility.
In the short run, most modellers assume some sort of wage rigidity, so any perturbations like the ETS will cause job losses. In the long run, wage growth will be slower to resume full employment or near full employment. One does not need to be a modeller to know the results of ETS without renewable energies.
With renewable energies, more opportunities are generated to employ more labour. That is for sure, but it says little about the underlying welfare situation. Further, how many jobs will be created will depend on the quantity of those assumed renewable energies and the labour intensity of each of them.
The point is that whether it is short term job losses, or job absorption by renewable, they all depend on assumptions used. And those assumptions are based on the current labour intensities and the assumed future labour intensities. In the long term, there is no job impact, because people/labour will adjust to any future situations.
In some sense, it is meaningless to talk about job losses or gains of one sector or at one time, under one particular scenario. There are always other balancing factors working to offset that. One needs to be realistic about modelling and results from modelling.
Once one understands how models work and how modellers work, it is not too difficult to understand their results. Nevertheless, having models is much better than having no models, and that is why modellers or forecasters are the beneficiaries of any debates involving economic consequences, such as employment and welfare.
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