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Australia Math The Almighty Buck

Australian Economists Predictions No Better Than Flipping a Coin 290

First time accepted submitter ras writes "The Reserve Bank of Australia did some investigation into the accuracy of their economic predictions — the ones they use to run the country — with less than flattering results. '70 per cent of the RBA's forecasts for underlying inflation for the year ahead were close to the mark, but its predictions of economic growth were less accurate, and its unemployment rate estimates no better than [chance] ... The Reserve Bank employs numbers of people on very high pay and what they're admitting now is that their — all of this so-called science — has produced nothing more than what a roll of the dice could produce.'"
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Australian Economists Predictions No Better Than Flipping a Coin

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  • by tqft ( 619476 ) <> on Monday February 04, 2013 @06:17AM (#42783979) Homepage Journal

    The page with everything linked on it []
    Estimates of Uncertainty around the RBA's Forecasts

    We use past forecast errors to construct confidence intervals and other estimates of uncertainty around the Reserve Bank of Australia's forecasts of key macroeconomic variables. Our estimates suggest that uncertainty about forecasts is high. We find that the RBA's forecasts have substantial explanatory power for the inflation rate but not for GDP growth.

    Download the Paper [PDF 713K] and the Data. [] []

    Licence []

  • by lxs ( 131946 ) on Monday February 04, 2013 @06:27AM (#42784031)

    Don't forget: Astrology relies heavily on extremely accurate and proven celestial mechanics. It is still bunk.
    Econometrics (bookkeeping with differential equations) is a real science. Economics is at best a pseudoscience that has built a cargo cult around the results of econometrics.

  • by FriendlyLurker ( 50431 ) on Monday February 04, 2013 @06:50AM (#42784115)
    Better link to the google talk by Steve Keen []. and the short intro video "Minsky, turning economics into a science" [].
  • Re:Economics... (Score:3, Informative)

    by zarlino ( 985890 ) on Monday February 04, 2013 @06:59AM (#42784145) Homepage

    And one where you can be the evil guy if you actually got your predictions right. (I'm thinking Marx here).

  • by arpad1 ( 458649 ) on Monday February 04, 2013 @07:43AM (#42784301)

    Umm, so what's the Keynesian excuse for Japan's "Lost Decade" and more recently, America's non-recovery from the it's-all-Bush's-fault recession?

    Lots of Keynesian goodness showered on both economies with nothing but massive government debt to show for it.

    As for the observation that economics isn't a science, the complete indifference to the scientific method should have made that obvious. The delightful irony is that when the scientific method's applied to the field of economics, the hypothesis being that economics is a science by virtue of its predictive powers, the hypothesis fails.

  • by Anonymous Coward on Monday February 04, 2013 @08:01AM (#42784355)
    You are being extremely ignorant of the Australian situation and really are just parroting the government spin. The reason we didn't go into a recession had nothing to do with the government spend. Australia was one of the few countries with extremely strict banking regulations which meant banks could not leverage themselves in the fashion they did in Europe and the US and hence no initial funding crisis, secondly as much as our banks suck they don't use the ridiculous sub prime lending practises that the US practised and thirdly our economy was massively supported by the mining industry shipping ore at record prices to China. What the government did was purely a PR compaign.
  • by Rockoon ( 1252108 ) on Monday February 04, 2013 @08:16AM (#42784405)

    given how retarded politics is here, I can only conclude that we are, indeed, The Lucky Country.

    Nah, this is simply the effect of mobilizing massive amounts of natural resources (the mining.) This is the same basic thing that kept the soviet union up for so long, of course in that case it was state sponsored but the how and why isnt really relevant to the effect.

    The problem is that you are just exporting most of the resources. You are getting some instant cash now, but you arent creating any value at all. This is similar to a company that is in trouble selling all its inventory at cost in order to get some much needed operating capital.

  • Re:Eh mate? (Score:5, Informative)

    by alexgieg ( 948359 ) <> on Monday February 04, 2013 @08:37AM (#42784485) Homepage

    When did we go from talking about Australian [] to Austrian? []

    Just wondering?

    I think you're joking, but if not, "Austrian" is the name of a school of economic thinking. It's called that because, different from Marxism (from Marx's name), Keynesianism (from Keynes') etc., it had more than a single founding economist, and most of them where from Austria. I guess it could be named "Bawerkism" from its very first economist (Eugen von Bohm-Bawerk), but that's not how it went. Besides, although Bohm-Bawerk was the first, the most famous were Ludwig von Mises and Friefrich von Hayek, so that you do find people talking about "Misesian" and "Hayekian" when focusing on particular ideas from either. So, we're stuck with calling it "Austrian Economics". What, admittedly, is a source of confusion.

  • by Vaphell ( 1489021 ) on Monday February 04, 2013 @08:53AM (#42784541)

    Austrians believe that the interest rate is pretty much the master knob and calling it the centrally planned economy is fully justified. Nothing else is anywhere near matching profound influence of the IR on economy as it coordinates activity across the whole economic time-space. []

  • by Kupfernigk ( 1190345 ) on Monday February 04, 2013 @11:57AM (#42785813)
    English is my native language and I have a humanities degree from Cambridge. That doesn't mean I know anything, it does mean my literary style has been criticised twice a week over nine academic terms. Although your English has a very slightly Teutonic ring to it, there is absolutely nothing wrong with it and, to my mind, the post from PPalmgren is completely out of order.

    Comma use in English is greatly disputed; even in lists we have the Oxford comma (one, two, three, and four) versus the Cambridge comma (one, two, three and four). We have the adherents of comma minimalism and the adherents of strict comma use in any short pause, leading to the story of the writer who visited her editor to discover that all the commas had been marked for exclusion in her latest piece, and spent the next hour going through the document putting stet against every single one. She knew there were too many but it was now a matter of principle.

    In English (i.e. England and Wales) legalese commas are avoided, because of the fear that a flaw in the paper or a fly mark will be read as a comma and affect the meaning of something. My father, a retired lawyer, often gets through an entire page of a letter without a single comma.

  • by BotnetZombie ( 1174935 ) on Monday February 04, 2013 @03:15PM (#42787853)

    The fact that evolutionary theory doesn't have (yet) predictive power is the primary reason why ID survives. When evolutionary biology produces falsifiable hypotheses with predictive power, ID will silently go away.

    You might want to reconsider that. Take a special look at the what E Coli did, as predicted. []

God doesn't play dice. -- Albert Einstein