Tuesday, 9 September 2014

Tony Makin makes a fool of himself

Tony Makin put out a paper for the Minerals council. In it he attempts to show the fiscal stimulus the Previous Government had actually made things worse.
No-one would be surprised that Henry Ergas, Sinclair Davidson and Judith Sloan all think it is fantastic.

Treasury responded and it was devastating

Just a couple of the clangers Makin made and the three amigos neglected to talk about:

  • Makin's understanding of the Mundell-Fleming hypothesis is  'ahem' limited
  • Makin calims export growth was the main reason.Except exports FELL. They just fell LESS than imports. That is why Net exports made the contribution to growth in the December quarter of 2008
  • Makin claimed the $A rose. It actually fell quite a bit.
This person has a job at a University and he cannot even do basic research!

Before finishing with this bit of academic garbage I should add Davidson is a believer it was monetary policy that caused the December quarter and following to be positive ( after he forecast it would be negative).
Now I did my Masters degree on Monetary policy. I have have never heard nor read of a lag so quick. Remember the RBA only started to cut rates in September. The other problem is these people will NEVER tell you the stance of Monetary policy and how they are measuring it. 
I can tell you some people  the RBA think this theory is absurd and the people expounding it simply lacking any understanding of how monetary policy works!  Amen to that brother.

added bonus Steve from Brisbane has his say.