Monthly Archives: July 2009

Mortimer success

Trade balance on goods and services (chain volume measures)

Intriguing evidence that the Mortimer Enquiry on Australia’s export performance (on which I served as an advisor) was remarkably successful in its efforts to reinvigorate our trade balance. 😉

Of course, I knew it would be. (‘The exchange rate‘, you say? Really?)

The ABS explains “trend estimates”

I’ve argued several times that the broadcast media has misrepresented quarterly unemployment by focusing on (the scarier of either) the raw or seasonally-adjusted data. Although there’s a great deal to be said for just eyballing a trend when you have a long time-series that accurately samples an ‘atomic’ phenomenon, trends in a series with statistically simple (‘normally distributed’) variability, like unemployment, can reasonably be represented by a smoothed trend estimate.

“Trend estimates are obtained by smoothing the seasonally adjusted estimates, with an assumption that the irregular component is random and normally distributed. Distortion of the trend estimate will occur in the presence of an unusual event, and if no correction for the impact is introduced, then the trend estimate can be misleading.” Extract from 1350.0 – Australian Economic Indicators, Aug 2009

As the ABS release argues, this procedure goes wrong when it’s no longer ‘business as usual.’ But the assumption that the world today is just like the world yesterday is both prudent and pretty successful, especially at the leading edge of a trend with established variation. Correlation of smoothed data series is a different matter: it may be a species of fraud.

FT iPhone App

FTMobile from the iPhone App Store

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p>Get this. It’s ‘free’ (as in lunch). Simply beautiful layout for the small screen. Lovely, informative market charts that can be refocussed with a screen gesture. Seems to eschew (an FT word!) images. Access, if you’re a subscriber, to most, if not all, of the paper including regional editions. After a few hours use I would say that the user experience is better than the FT website: it loads faster, fewer ads, layout is more consistent.

Temperatures for June in Victoria

Temperature anomalies for June, 1950 - 2009

June 2009 was not as warm as June 2008, but still 0.8° C above the average for 1961-1990, according to the Australian Bureau of Meteorology. There have been ten hotter Junes since 1950.

Remove the buy-local tax on books

Yes! The right recommendation for a more competitive and better-informed (or, at least, better-read) Australia.

“The Government should repeal Australia’s Parallel Import Restrictions (PIRs) for books. The repeal should take effect three years after the date that it is announced.” Extract from Research report – Productivity Commission

This discretionary quota on books maintains local margins for the global book publishers and printers at the cost of readers and competitive Australian publishing. Now maybe—at last—we will see a more aggressive release of electronic titles (‘Kindle books’) in Australia. Welcome to the 21st century.

Market and PPP measures of GDP

Source: IMF data mapperSource: IMF data mapper

In comments on the previous post, Ian Castles AO, the former Australian Statistician, notes that the World Bank and IMF create confusion in their reports by mixed use of market-exchange-rate (MER) and purchasing-power-parity (PPP) bases for estimating output and growth. Simply, using market exchange rates to compare the value of output among countries over-estimates the size of developed economies and under-estimates the size of developing economies. This confusion affects their analyses of, among other things, trade data.

The charts (click the thumbnails), taken from the two sets of data prepared by the IMF, show the dramatic difference between MER and PPP bases for comparing output and growth. Using the PPP basis for comparison, developing countries’ economies are much larger in relation to developed economies and projected to ‘close the gap’ sometime after 2015 (take the IMF projections with a grain of salt: they’re just ‘straight line’ extensions of current patterns of growth). The only difference between the two charts is the identification of China. Note that using a PPP basis for comparison, China appears less dominant in the developing country group.

Caloric restriction diet doesn’t work

Reports this week that a “nutritious but reduced-calorie diet blunts aging and significantly delays the onset of such age-related disorders as cancer…” are a perverse account of a study that showed no statistically significant effect of calorie restriction.

Sandy Szwarc shows that the supposed benefits appear only if the results are cooked by ‘cherry picking’ the trial’s mortality records. She also summarizes the weight of evidence that calorie restriction ‘life extension’ is vodoo (or possibly a commercial venture in this case)