The CofFEE conference came to a close on Friday. The morning started with some mathematics as Trond Andresen (visiting from Norway) talked us through a simple model of the impact of the Basel capital adequacy rules on money supply and debt. He concluded that an unintended side-effect of the rules was to condemn our economies to exponential growth in private sector debt. I have some suspicions that the model is a bit too simple, but I will think about it some more and may post a discussion about it in the future.
Another interesting presentation gave a sneak-preview of a new website developed by Bill Mitchell and his colleagues at CofFEE. The website allows you to explore Australian labour market statistics by “functional regions” rather than the traditional regions used by the href=”http://www.abs.gov.au”>Australian Bureau of Statistics (ABS). The ABS regions have traditionally been based on administrative regions (post code, council areas, etc) which do not necessarily cluster areas of similar demographic characteristics. Bill has used spatial statistical techniques to come up with more useful regional definitions. Interestingly, the ABS have followed the work closely and have in fact adapted their own regions as a result, although they remain somewhat constrained by the need to have large enough populations in each region for statistically significant results. The new functional regions website features some impressive data visualisation, including integration with Google maps. I will post a link as soon as the site is public.
Visiting US academic Randall Wray closed the session with a discussion of the shortcomings of the US Federal Reserve’s latest efforts to stimulate the ailing US economy. “Quantitative easing” (known as QE2 as it’s the second time the have used this tool) has been controversial across the political spectrum and has raised the hackles of some countries who see it as an effort to devalue the US dollar as part of a “currency war”. Wray argued that QE2 was not like a “helicopter drop of money” as some critics fashion it, nor would it have a lasting effect on the economy. Nevertheless, he was also critical of the program, but for a different reason, simply that it would do nothing to stimulate the economy. The talk also had a polemical take on the undemocratic nature of the Federal Reserve which, at least until recently, has been far less transparent than the Treasury.
Before jumping on the train back to Sydney, I was lucky enough to record an interview with Bill Mitchell in which he described his primary policy prescription for dealing with unemployment: the Job Guarantee. As soon as I have edited and polished the recording, I will be posting it here on the blog. It will be the first in what I hope to be a series of audio “Mule Bites”. Yes, stay tuned for a Stubborn Mule podcast!