14 thoughts on “Weekend reflections”

  1. I wonder whether last night’s ABC Catalyst program undermines the assumptions in the ABARE costs-of-climate-mitigation report. In my opinion the program did a comprehensive demolition job on the engineering feasibility of the whole concept of CO2 capture, with or without carbon taxes. I think the bloke who said we’d need 15 years to get it right was really saying ‘try something else’.

    Since geosequestration was arguably the lynchpin of the ABARE report I think the Feds should ask them to look into the economics of far reaching replacement of coal.

  2. It’s funny, but I haven’t been able to find a thorough investigation by anyone of the economics of CO2 sequestration, starting with CO2 capture, cooling and compression from a hot, fast-moving mixture of H2O and CO2, i.e. the exhaust gases of a fossil-fuel power station. Pumping CO2 underground is the easy bit.
    Can anyone oblige?

  3. Question 34 of our census defined “job” as “any type of work including casual,temporary,or part-time work , if it was for one hour or more”, in the “last week”. If this figure were reduced to zero minutes, our employment figures could be improved, beyond what our P.M. claims is a 30 year best. Indeed, i think we would have reached full employment – the goal of any self respecting leader. Any thoughts?

  4. joe2,
    Your critique is valid even if you picked say 5, 10 or 15 hours/week as the benchmark. A further question- ie would you like to work more hours/week if available can help measure underemployment here. However the unemployment question will measure changes in unemployment over time (rather than some theoretical absolute) and this trend is of main interest to policymakers. Also when you think about it, it’s unlikely too many ’employed’ work only an hour or so a week for wages.

  5. I wanted to pose a question for the economists out there.

    Are there such a things as a dedicated “Field Economists” or “Experimental Economists” ?

    In hard sciences such as physics you tend to get specialisation into theorists and experimentalits, and the two spend their time undertaking quite different tasks. The theorist work on their theories and the experimentalist validate or invalidate them.

    In softer sciences, such as paleontology or ecology for example, it seems that there are not dedicated theorist. Instead everyone spends alot of time engaged in field research or painstakingly analysing the results of their field research. The theory tends to emerge naturally out of the field work.

    My impression is that in ecomomics it is the other way around. Everyone seems to be a theorist, developing models to explain existing data. Is this a correct ? It often seems there are considerable quantities of advanced theoretical work out there, but not a lot of confidence in how applicable it is to the real world. Is it possible we could benefit from the existence of dedicated Field and Experimental Economists ?

  6. You also need to be aware of the participation rate here, which is why Peter Chicken Man Costello is cackling about the record high participation rate coupled with the record unemployment rate. Naturally Labor’s roosters have stopped crowing somewhat, that the sky is falling with Workchoices. Back to the sky is falling on interest rates and inflation for them now.

  7. SWIO,

    There is indeed a field of economics called Experimental Economics, which attempts to test hypotheses using mostly computer simulations (and some survey work).

    However, as a moment’s thought will tell you, it is practically difficult, not to mention politically and morally unacceptable to conduct many economic experiments in real life – eg, imagine trying to derive a demand schedule for credit by gradually increasing interest rates each month – how could you ensure all other variables remain ceteris paribus (ie. how can you have a ‘control’)? How politically saleable would that be?

    Hence, economists tend to rely on testing hypotheses against historical data.

    Part of the problem of experimental economics, especially when it relies on surveying people, is that people tend to act differently than they say they would.

    I think the biggest difficulty in economics is keeping variables constant – there is not the luxury of having controls, especially when people act very differently at different times and across different cultures etc.

  9. swio – Ecology is very much divided between those who passively measure things in the field, those who conduct experiments in the field or the lab, and those who generate theory. A small number of individuals straddle these classes. Broadly speaking, there is a gradient of mathematical sophistication that increases from the passive measurers (who are usually mathematical dunces) to the theroetical ecologists (who are often mathematically literate).

  10. Recently I tried to find a comprehensive list of currencies that are managed using an explicit exchange rate target (ie fixed exchange rate). I was not able to find any entirely satisfactory source so I created a new category at wikipedia. So far I have added a handful of currencies to the category but I am sure there are more.

    http://en.wikipedia.org/wiki/Category:Fixed_Exchange_Rate

    If anybody knows of any that are not on the list then they can be added to the category by inserting the following text near the end of the relevant wikipedia article that describes the currency:-

    [[Category:Fixed Exchange Rate]]

    If you can help to update Wikipedia in this regard then I would appreciate it.

  11. References to the Catalyst report on CO2 geosequestration and the ABARE report previously posted on by Prof. Quiggin (Jul. 29th) encourage me to ask again: does anybody have any idea why the ABARE report included the reduced-trade-barriers assumption? ABARE says “It is assumed that by 2025 all trade barriers in terms of export/output subsidies and import tariffs have been reduced by 70 per cent across the board and across the globe� (p.15). This is just after the Doha round has been suspended!

  12. swio, one of the most interesting developments in economics in recent years is indeed the huge strides made through experimental approaches in a field called ‘behavioural economics’. From my reading recently, I have found the best reference is one titled simply “Advances in Behavioural Economics” (Princeton University press, 2003). It’s edited by some of the leaders in the field and contains many of the most important articles and findings from past years. this is a a fairly new field, only some 20 years old – although some would also call herbert simon a behavioural economist, he was the first psychologist to win a Nobel for economics. Basically, through experimentation with what people actually do when faced with economic choices, behavioural economics puts a real world spin on some of the simplifying assumptions made in more theoretical/mathematical economics.

  13. stephen bartos,

    Thanks for the book suggestion. Exactly the kind of stuff I am curious about. I wonder if any of the work in behavioural economics has led to the confirmation or rejection of any theoretical models.

  14. O6, gordon
    the economics of carbon capture seem irrelevant if it is a physical impossibility on the required scale. I once read something from the UK Tyndall Climate Centre on the adequacy of the EU carbon trading scheme but the link seems to have been deleted. Moreover I’m not sure an incremental analysis will work if the primary energy sector gets too big a shock.

    Re trade and energy it’s kind of bizarre that if a Beasley government introduced a local carbon trading scheme with real cuts (say 20%) then the exported half of Australia’s black coal production would be exempt.

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