DOCSLIB.ORG

A 'New Era' for the Reserve Bank?

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
A 'New Era' for the Reserve Bank? FEATURE A ‘NEW ERA’ FOR THE RESERVE BANK? Australia’s central bankers should face greater scrutiny and accountability, argues Stephen Kirchner n 6 December 2007, the incoming monetary policy and weaken the RBA’s account- Labor government announced a ability for infl ation at a time when it is presiding ‘new era’ for the Reserve Bank over the worst underlying infl ation outcomes since of Australia (RBA) with revised the current economic expansion began sixteen arrangements for appointing the years ago.5 Obank’s senior offi cers and external board members, in conjunction with a new joint ‘Statement on Appointment of senior officers the Conduct of Monetary Policy’ between the Under the new statement, the positions of the bank and the government.1 On the previous day, governor and deputy governor of the RBA will the RBA also announced new arrangements for have their level of statutory independence raised communicating with the public about monetary to be equal to that of the Commissioner of policy.2 The RBA board’s press release was careful Taxation and the Australian Statistician. Their to indicate that these measures had been under appointments will be made by the Governor- consideration for ‘some months.’ However, their General in Council, and can be terminated only announcement at the fi rst RBA board meeting with the approval of both houses of Parliament in after the federal election was hardly coincidental. the same session of Parliament. This measure serves Reform of the governance arrangements for the to increase the independence of the RBA’s senior RBA had been expected to be a priority for the new offi cers, in that they can no longer be dismissed by government after more than ten years of neglect ministerial fi at. In practice, however, this was not under the former treasurer, Peter Costello. The a serious threat under the previous arrangements. RBA had also fallen to the bottom of international rankings of central bank transparency.3 While in some respects an improvement, Dr Stephen Kirchner is Principal the new arrangements leave the RBA operating of Institutional Economics and an under an outdated and internationally anomalous Economist with Action Economics, governance structure that is incompatible with LLC. His blog can be found at modern demands for central bank transparency www.institutional-economics.com. and accountability. They also leave in place many of the fl aws from previous iterations of the joint ‘Statement on the Conduct of Monetary Policy’ since August 1996.4 The new arrangements Endnotes for this article can be may serve to entrench bureaucratic infl uence on found at www.policymagazine.com. 18 Vol. 24 No. 1 • Autumn 2008 • POLICY A ‘NEW ERA’ FOR THE RESERVE BANK? The RBA’s senior offi cers have always enjoyed a measures that may actually detract from central high degree of effective independence, owing to bank accountability rather than enhancing central the fact that dismissal would be politically costly bank independence. to the government of the day if the governor and deputy governor enjoyed a strong reputation. Appointment of external International capital markets could also be board members expected to severely mark down Australian-dollar- Under the new arrangements, the Treasury secretary denominated assets in response to any attempt to and the RBA governor will maintain a register of compromise the RBA’s independence. ‘eminent’ candidates of the ‘highest integrity,’ from Section 11 of the Reserve Bank Act 1959 which the treasurer will be required to make new already provides a procedure for resolving policy appointments to the RBA board. This provision differences between the RBA board and the is designed to remedy the situation by which government of the day. The treasurer can override these appointments have been used for political a decision of the RBA board, but this would patronage, most recklessly in the case of former lead to the tabling in Parliament of the board’s treasurer Peter Costello’s appointment of Robert reasons for differing with the government’s Gerard to the board in 2005. The Gerard affair decision. As the most recent joint statement also exposed weaknesses in the ‘Code of Conduct notes, ‘the procedures are politically demanding and their nature reinforces the Reserve Bank’s independence in the conduct of monetary policy.’ The performance of the RBA That no treasurer has invoked these procedures in relation to monetary policy strongly suggests that the existing arrangements and inflation outcomes is already afford the RBA a high degree of effective poorly benchmarked. independence. The RBA’s willingness to raise interest rates in the middle of the 2007 federal election campaign does not point to it being for Reserve Bank Board Members,’ mainly the politically intimidated. lack of effective sanctions for noncompliance. The The new arrangements may instead err in the larger problem under the former government was direction of affording the RBA’s senior offi cers not so much the politicisation of board and senior too much protection. Central bank independence offi cer appointments, but Treasurer Costello’s needs to be balanced with accountability for failure to perform his ministerial responsibilities per formance, especially in relation to infl ation in a timely fashion. The vacancy created by Bob outcomes. Under the new arrangements, it Gerard’s resignation was not fi lled for more than will be even more diffi cult to remove an RBA a year, while the deputy governorship of the RBA governor for poor performance, at least in the was also left unfi lled for fi ve months.6 Warwick absence of a bipartisan political consensus. This McKibbin’s fi rst fi ve-year term on the RBA board compounds a more serious problem, which is expired on 30 July 2006, but the then-treasurer that the performance of the RBA in relation to did not sign off on his reappointment until at monetary policy and infl ation outcomes is poorly least 27 July, leaving his eligibility to participate benchmarked (see below). By contrast, the New in the next RBA board meeting formally in doubt Zealand model establishes a clear relationship until the last minute.7 between infl ation performance and the tenure of The new arrangements serve to protect the the governor of the Reserve Bank of New Zealand, appointments process from undue political including a procedure for dismissing the governor infl uence, but create a new problem in that they for nonperformance. will effectively limit board appointments to those The new arrangements in relation to the who meet with bureaucratic approval from the RBA’s senior offi cers reinforce its independence offi cial family of the RBA and Treasury. This is on paper, but in practice the new government likely to limit the diversity of views represented has addressed a nonexistent problem by taking at board meetings and reduce effective external Vol. 24 No. 1 • Autumn 2008 • POLICY 19 A ‘NEW ERA’ FOR THE RESERVE BANK? scrutiny of monetary policy decision-making. about monetary policy. Governor Glenn Stevens The new appointments process for external board elaborated on the rationale for the RBA’s new members risks entrenching the infl uence of the transparency regime in a speech to the Sydney RBA’s senior offi cers over the monetary policy Institute on 11 December 2007.9 Stevens was decision-making process, at the expense of those careful to dissociate the new measures from the who may have previously been critical of the bank’s change in government, saying that the RBA had monetary policy. It is not clear whether the register ‘refl ected on this for some time this year,’ and that of eminent candidates will be a public document he ‘was very pleased to learn when I met the new that is itself open to scrutiny. The involvement of Treasurer a couple of weeks ago that he supported the Treasury in this process is also at odds with the changes.’ While it is likely that the new measures international trends in central bank reform, which have as much to do with the change at the top of generally seek to increase the degree of separation the RBA in 2006 as with the change of government between monetary policy and the fi scal authority. in 2007, the RBA’s internal consideration of these matters may have been designed to preempt inevitable demands for increased transparency The new appointments process following a change of government. for external board members risks The RBA will now release a statement following each monthly board meeting, even entrenching the influence of the when interest rates are not changed. This brings RBA’s senior officers. the RBA into line with the practices of central banks in comparable countries, and is a marked improvement on the previous arrangements, The Treasury secretary’s continued ex offi cio whereby the RBA simply noted that interest rates membership of the RBA board is also at odds had been left unchanged, without giving reasons. with these trends. The traditional objection to the Indeed, it is only in the last few years that the Treasury secretary’s role on the RBA board is that it RBA has made an announcement of any kind might serve as a vector for political infl uence over following board meetings if interest rates were monetary policy. But a more basic and powerful not changed. The fi rst such statement, following objection is that the Treasury secretary’s role on the December 2007 board meeting, saw a rally in the board is not well-understood. Former RBA bond futures and a decline in the Australian dollar governor Ian Macfarlane said that ‘no one has ever despite a steady interest rate outcome, implying understood whether the Treasury Secretary speaks that the statement conveyed new information to for Treasury or the Treasurer and I still don’t the market, resulting in more effi cient pricing know the answer to that … The only time the of fi nancial instruments.
Load more

Recommended publications
  • Glenn Stevens: Inflation Targeting - a Decade of Australian Experience1
    Glenn Stevens: Inflation targeting - a decade of Australian experience1 Address by Mr Glenn Stevens, Deputy Governor of the Reserve Bank of Australia, to South Australian Centre for Economic Studies April 2003 Economic Briefing, Adelaide, 10 April 2003. * * * It is a pleasure to be here in Adelaide to take part in this Economic Briefing. As the title of this address makes clear, I would like to look back over a decade of experience using an inflation target for monetary policy in Australia. Just a couple of weeks ago saw the tenth anniversary of a speech by Bernie Fraser, then Governor of the Reserve Bank, in which the outlines of our target can be seen.2 It was, admittedly, a tentative beginning – there was no drum roll, or breathless talk of a new era. A reasonably careful reading of that speech was (and is) needed to see the contours of the approach to monetary policy which was being developed, and the framework was not fully formalised until the 1996 Statement on the Conduct of Monetary Policy.3 It is perhaps for this reason that some commentators believe that inflation targeting in Australia in fact began much later. But those who were there at the time – as I was – saw the material in that and a couple of other speeches of the period as quite significant, in that it associated intent of policy with numerical objectives for inflation, even if only fairly broadly defined ones. The behaviour of policy over the ensuing years was, moreover, quite consistent with those ideas. Hence I remain happy to claim that inflation targeting in Australia began about ten years ago in the first half of 1993.
    [Show full text]
  • Select List of Delegates Boao Forum for Asia Sydney Conference Government International/Regional Organizations Business
    As of July 3, 2015 Select List of Delegates Boao Forum for Asia Sydney Conference Government Tony Abbott MP, Prime Minister of Australia Yasuo FUKUDA, Former Prime Minister, Japan Bob HAWKE, Former Prime Minister, Australia Jenny SHIPLEY, former Prime Minister, New Zealand Glenn STEVENS, Governor, Reserve Bank of Australia Bob CARR, Former Foreign Minister, Australia Mike BAIRD, Premier of NSW Wayne BYRES, Chairman, Australian Prudential Regulatory Authority Sally LOANE, CEO, Financial Services Council Greg MEDCRAFT, Chairman, Australian Securities and Investment Commission Zhang Xiaohui, Assistant Governor, People's Bank Of China Cai Esheng, Former Vice-Chairman, China Banking Regulatory Commission XU Shanda, Former Vice Minister, the PRC State Administration of Taxation Ian Johnston, Chief Executive, Dubai Financial Services Authority K C CHAN, Secretary for Financial Services and the Treasury, Hong Kong Stuart Ayres MP, Minister for Trade, Tourism and Major Events Andrew Constance MP, Minister for Transport and Infrastructure Warren Truss MP, Deputy Prime Minister, for Infrastructure and Regional Development M. Jean-Etienne LEROUX, Regional Director, Transactions & Asset Management – Infrastructures Australia & Asia Pacific Jim BETTS, CEO Infrastructure NSW David Gall, Chief Risk Officer, National Australia Bank Ltd `former Australian Ambassador to China International/Regional Organizations Pascal LAMY, Former Director General, World Trade Organization ZHOU Wenzhong, Secretary General, Boao Forum for Asia Business MA Zehua, Chairman
    [Show full text]
  • Media & Hansard
    9/22/2009 News: Australian Stock, Share & Com… Welcome to Trading Room. Skip directly to: Search Box, Section Navigation, Content, Text Version. NEWS | MYCAREER | DOMAIN | DRIVE | FINA NCE | MOBILE | RSVP | TRA VEL | WEATHER member centre | login Trading Room home page Economists air extreme views at stimulus inquiry Market watch top headlines Australian reports Aust markets: ASX expected to open lower Aust dollar report: $A opens flat after offshore session Aust credit close: Bonds close weaker World reports World commodities: Oil, gold and silver all down World markets: US and European stocks fall Stocks to watch PMV, TLS, RIO, QAN, BLD, AIO, MAP, MMX, PPX, GNS, CANBERRA, Sept 21 AAP September 21 2009, 6:06PM Senators heard both sides of the economic divide at an inquiry on Monday to determine whether the federal government's economic stimulus has worked and whether it should continue. Quizzing several academic economists, the inquiry heard that the stimulus was a waste of money, that the recession was a normal part of the business cycle and should have been left for the free market to resolve. It was also argued that the human tragedy would have been far worse without the billions of dollars stimulus, regardless of whether it results in higher interest rates and higher taxes. Indeed, one economist believed more money should be spent on lifting the unemployment benefit to stimulate the economy further. Prime Minister Kevin Rudd told CNN from New York where he is attending the United Nations General Assembly, before heading to G20 Leaders Meeting Pittsburgh later this week, that calls for an immediate withdrawal of stimulus from the global economy were "misplaced".
    [Show full text]
  • SYDNEY ALUMNI Magazine
    SYDNEY ALUMNI Magazine Spring 2006 SYDNEY ALUMNI Magazine 8 10 14 18 RESEARCH: THE GENDER SELECTOR FEATURE: PEAK PERFORMERS PROFILE: COONAN THE AGRARIAN ESSAY: DEAD MEDIA Spring 2006 features 10 PEAK PERFORMERS Celebrating 100 years of physical and health education. 14 COONAN THE AGRARIAN Federal Communications Minister Helen Coonan: Editor Dominic O'Grady a girl from the bush done good. The University of Sydney, Publications Office Room K6.06, Main Quadrangle A14, NSW 2006 18 DEAD MEDIA Telephone +61 2 9036 6372 Fax +61 2 9351 6868 The death of each media format not only alters Email [email protected] the way we communicate, but changes the way Sub-editor John Warburton we think. Design tania edwards design Contributors Gregory Baldwin, Tracey Beck, Vice-Chancellor Professor Gavin Brown, Graham Croker, regulars Jeff Hargrave, Stephanie Lee, Rodney Molesworth, Maggie Renvoize, Chris Rodley, Ted Sealy, Melissa Sweet, 4 OPINION Margaret Simons. International research hubs are the way of the future. Printed by Offset Alpine Printing on 55% recycled fibre. Offset Alpine is accredited with ISO 14001 for environ- 6 NEWS mental management, and only uses paper approved by Alumnus becomes Reserve Bank Governor. the Forest Stewardship Council. 8 RESEARCH: THE GENDER SELECTOR Cover illustration Gregory Baldwin. New sperm-sorting technology will make gender Advertising Please direct all inquiries to the editor. selection a commercial reality. Editorial Advisory Committe 23 NOW SHOWING The Sydney Alumni Magazine is supported by an Editorial Seymour Centre hosts theatre with bite. Advisory Committee. Its members are: Kathy Bail, Associate Editor, The Bulletin; Martin Hoffman (BEcon '86), consultant; 26 SPORT Helen Trinca, Editor, Boss (Australian Financial Review); Macquarie Bank’s David Clarke lends a hand.
    [Show full text]
  • Surplus Fetish the Political Economy of the Surplus, Deficit and Debt
    Surplus fetish The political economy of the surplus, deficit and debt Policy Brief No. 26 May 2011 ISSN 1836-9014 David Richardson Policy Brief 2 Contents 1. Introduction 3 2. Historical and international debt comparisons 4 3. Surplus thinking 7 4. Active fiscal policy—the alternative view 1 5. How does the government justify the surplus objective? 12 6. But the private sector loves government debt 13 7. Super liabilities as government debt? 15 8. Intergenerational equity? 16 9. Conclusions and reflections 17 References 19 3 In the present situation of a temporary slowdown in economic growth, an easing in the fiscal position is appropriate as it helps to support demand growth in the economy. 1 1. Introduction The federal budget presents a complex management puzzle that all governments have to address and explain to the electorate. Sometimes concepts are borrowed from the corporate sector and sometimes analogies are made with the household sector; the Howard Government, in particular, imported numerous corporate accounting concepts. But often these concepts are applied uncritically and inappropriately. By way of discussing the budget balance—surpluses, deficits and the debt outcome—this paper addresses some of those inappropriate usages and their consequences. During the recent election campaign, both sides of the political debate paid homage to the virtues of a budget surplus, along with the associated views that deficits and debt are ‘bad’ and need to be reined in as soon as possible, and continue to do so. Budget one-upmanship has moved beyond the balanced-budget obsession of the 1990s to the new aim of producing an ongoing surplus, the bigger the better, under which it is taken for granted that everyone will be better off.
    [Show full text]
  • Letter from Canberra Is a Sister Publication of Letter from Melbourne, Which Was Established 16 Years Ago
    LETTERSaving you time. A monthly newsletter distilling FROMpublic policy and government decisions CANBERRA which affect business opportunities in Australia and beyond. 5 JULY TO 7 AUGUST 2009 Issue No. 16: Post Ute-Gate/GFC Edition (Hopefully) Letter From Canberra is a sister publication of Letter From Melbourne, which was established 16 years ago INSIDE Australian Fair Broadband Rudd guilty ‘The very Throwing the The difference Emissions Health system Pay Commission developments of Camelcide strange Godwin book at the between trading: suggested freezes wages Grech’ Productivity Iraq and vote close, changes. A big Commission Afghanistan agreement far job. NEXT MONTH Mulesings Australian ships 5 JULY TO 7 AUGUST 2009 14 Collins Street Melbourne, 3000 Victoria, Australia P 03 9654 1300 EDITORIAL F 03 9654 1165 [email protected] Q&A is an ABC TV weekly event, vintage on Thursday 6 August, when Deputy prime minister Julia Gillard and www.letterfromcanberra.com.au Opposition leader Malcolm Turnbull were on the panel with the whole audience, and three of the six person panel, being under 25. As the two leaders debated the rights and wrongs of Ute-Gate on the head of a pin, NextGen said ‘Move On’, that Ute-Gate was distracting from bigger issues such as education and health and almost everything else. Editor Alistair Urquhart Associate Editor Rick Brown The International Student Crisis, ISC, linked as it is with immigration and international trade, is an awakening Sub-Editor Hamish Brooks difficulty for Australia, the gravity still to flow through. Copy-Editor Robyn Whiteley Subscription Manager Andrea Hodgkinson Design Ray Zhang Camels hit the headlines for a day or so in the Australian press and became a news/mockstory/spoof in the United States media, when Prime Minister Rudd featured.
    [Show full text]
  • Biographies of Contributors 381
    Biographies of Contributors 381 Biographies of Contributors Charles Bean Charles Bean (MA, Cambridge; PhD, MIT) is Chief Economist and an Executive Director at the Bank of England, having previously been Professor of Economics and Head of Department at the London School of Economics (until September 2000). He has published widely, in both professional journals and more popular media, on European unemployment, on European Monetary Union, and on macroeconomics more generally. He has served on the boards of several academic journals, and was Managing Editor of the Review of Economic Studies (1986–90). He has also served in a variety of public policy roles, including: as consultant to HM Treasury; as special adviser to both the Treasury Committee of the House of Commons, and the Economic and Monetary Affairs Committee (Labour Group) of the European Parliament; and as special adviser on the House of Lords enquiry into the European Central Bank. Peter Dawkins Professor Peter Dawkins is the Ronald Henderson Professor and Director of the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne. He has held this position since 1996. Prior to that he was Professor of Economics at Curtin University of Technology. He holds a BSc and a PhD from Loughborough University in the UK, and an MSc from the University of London. He migrated to Australia in 1984. His research has been in labour economics, social economics and industrial economics and he has published several books and many articles in these areas. He has been prominent in policy debates about unemployment and the tax and welfare system, and in October 1998 was one of five prominent economists who sent a letter to the Prime Minister outlining a plan for substantially reducing unemployment.
    [Show full text]
  • Critical Reflections on Australian Public Policy
    11. The two cultures re-examined: a perspective on leadership and policy management in business and government1 Philip M Burgess In this essay, I will reflect on my experience as a student of governance, working for many years in the academy and as a practitioner or clinician of the same, working in the United States, East Asia, Europe and, of course, Australia, in order to make some observations about the key differences between the political cultures of the United States and Australia as they relate to public policy making. The two cultures of business and government For a long time, I have been fascinated by the decision-making environments of public administration and business administration. I believe the differences are much more important than the similarities. As shown in more detail in Appendix 11.A, these differences are many. For example: · goal setting in the enterprise sectorÐto delight customers and reward shareholdersÐis relatively narrow compared with the comprehensive `public interest' objectives pursued by government · enterprise sector leaders almost always enjoy the support and encouragement of their policy board; by contrast, public sector leaders are nearly always opposed by a vocal segment of their policy boardÐthe legislatureÐwhich tries to embarrass, trip up or otherwise undermine the authority and standing of the leader · enterprise leaders have enormous control over the decision processÐthe who, what, when and how of decision making; the CEO can decide who will participate on what issues at what time in what arena; public sector leaders do not have this kind of control 2 · enterprise leaders have substantial control over staffing and other `factors of production'; public sector leaders are much more constrained in the hiring, sacking and assignment of people.
    [Show full text]
  • List of Participants
    List of Conference Participants 367 List of Conference Participants Grant Belchamber Claudia Goldin Senior Research Officer Professor of Economics Australian Council of Trade Unions Harvard University and Leo Bonato Visiting Scholar The Russell Sage Foundation Adviser Economics Department Bob Gregory Reserve Bank of New Zealand Professor of Economics Jeff Borland Research School of Social Sciences Australian National University Visiting Fellow Centre for Economic Policy Research Stephen Grenville The Australian National University Deputy Governor John Buchanan Reserve Bank of Australia Deputy Director David Gruen Australian Centre for Industrial Head of Economic Research Relations Research and Training Reserve Bank of Australia The University of Sydney Nicholas Gruen Bruce Chapman Assistant Director Professor of Economics and Director Business Council of Australia Centre for Economic Policy Research Keith Hancock The Australian National University Honorary Research Fellow Peter Dawkins The University of Adelaide Professor of Economics and Director Ann Harding The Melbourne Institute of Applied Professor of Economics Economic and Social Research and Director The University of Melbourne National Centre for Social and Guy Debelle Economic Modelling Senior Research Economist University of Canberra Reserve Bank of Australia Barry Hughes Mardi Dungey Chief Economist Department of Economics Credit Suisse First Boston La Trobe University Richard Jackman Jacqui Dwyer Professor of Economics Senior Economist Centre for Economic Performance (Prices,
    [Show full text]
  • Glenn Stevens: the Inaugural Warren Hogan Memorial Lecture
    Glenn Stevens: The Inaugural Warren Hogan Memorial Lecture Text of The Inaugural Warren Hogan Memorial Lecture by Mr Glenn Stevens, Governor of the Reserve Bank of Australia, at the School of Economics, University of Sydney, Sydney, 8 December 2011. * * * It is a very great pleasure, as a former student of Professor Warren Hogan, to give this lecture in his memory. Thank you to the Hogan family, many of whom are here this evening, and to the School of Economics at the University of Sydney for giving me this honour. Before recounting one or two personal reminiscences, it is appropriate to say something about his life. Many fascinating details of it are revealed in the interview with John Lodewijks, and the eulogy by Tony Aspromourgos, both fittingly published in the Economic Record.1 Warren Pat Hogan was born in Papakura, just south of Auckland, New Zealand, in 1929. He completed his undergraduate and Master’s education at Auckland University College, where he was taught by Colin Simkin, who later was also at the University of Sydney. He married Ialene, a fellow student in the same faculty, in 1952. Hence it is not altogether surprising that Hogan’s children seemed drawn to economics. Four of the five children, and several of the grandchildren, have degrees in economics. After gaining early work experience at the Reserve Bank of New Zealand, Hogan, with a young family in tow, came to Australia in the mid 1950s, where he gained a PhD from the Australian National University in 1959, his research being on growth theory. His supervisor for that work was Trevor Swan, one of Australia’s most renowned theoretical economists (and subsequently a member of the Reserve Bank Board).
    [Show full text]
  • Biographies of Contributors
    BIOGRAPHIES OF CONTRIBUTORS Biographies of Contributors Ric Battellino Ric Battellino is the Deputy Governor of the Reserve Bank of Australia and a member of the Reserve Bank Board. Prior to taking up his current position he held senior roles in a number of areas of the Bank, including time as the head of the Bank’s Domestic Markets and International Departments and 13 years as the Assistant Governor of the Financial Markets Group. Mr Battellino has had over 30 years experience in central banking. He received his undergraduate education at the University of Queensland and was a Sloan Fellow at the London Business School. Alan Bollard Alan Bollard is the Governor of the Reserve Bank of New Zealand, a position he has held since 2002. Before taking up his current role he served for four years as Secretary of the Department of the Treasury. Dr Bollard was the Chairman of the New Zealand Commerce Commission between 1994 and 1998, following a period as Director of the New Zealand Institute of Economic Research. He has also worked as an economist in a variety of positions in the United Kingdom and the South Pacific, and is the author of a number of books on the New Zealand economy. Dr Bollard received his doctorate from the University of Auckland in 1977. Adam Cagliarini Adam Cagliarini is the Head of the Asian Economies Research Unit at the Reserve Bank of Australia. His research interests include the interaction of fiscal and monetary policies, forecasting and public finance. He has worked on developing methods for solving linear rational expectations models with predictable changes and explored the consequences of uncertainty for policy decision-making.
    [Show full text]
  • Ted Evans to the Rescue
    Agenda, Volume 8, Number 3, 2001, pages 277-288 NON-AGENDA With the view of causing an increase to take place in the mass of national wealth, or with a view to increase of the means either of subsistence or enjoyment, without some special reason, the general rule is, that nothing ought to be done or attempted by government. The motto, or watchword of government, on these occasions, ought to be Be quiet...Whatever measures, therefore, cannot be justified as exceptions to that rule, may be considered as non-agenda on the part of government. Jeremy Bentham (c.1801) Ted Evans to the Rescue Ian Henderson hen Ted Evans returned to Australia in May 1993 to take up the post of Treasury Secretary after four years in Washington DC on the board of Wthe International Monetary Fund, he found local economists — including policy advisers in his Department and many others with a professional interest in economic policy and analysis — in a mess. It was a mess largely of their own making, although it had been aided and abetted by widespread superficial commentary, especially from politicians who had absorbed the views of their expert official advisers, promoted them in the public’s mind and were thereby seemingly locked into those views, almost regardless of their stupidity. At issue was the significance of the balance of payments current account deficit (CAD) for policy, including whether policy-makers should, and if so, how they should, attempt to narrow that deficit. As Reserve Bank of Australia (RBA) economists David Gruen and Glenn Stevens (2000:58) put it in a recent description and analysis of the state of play at the start of the 1990s: Concern about the current account and Australia’s foreign debt probably reached a peak at the beginning of the new decade.
    [Show full text]