Oil shock
Last year I bleated ineffectually on here (first here, but then most of the last few entries tagged economics) about how we don't appear to have a sufficiently robust understanding of macroeconomics for economists to agree on apparently simple things like whether raising interest rates will increase or decrease inflation.
That debate's still ongoing, and now it turns out economists don't even agree about things that seem even more simple, like whether cheaper oil/energy prices are a boost or a drag on oil-importing economies. The previously-uncontroversial answer was that cheaper oil is terrible news for net oil exporters and brilliant news for net oil importers. But apparently current market events are making this subject to serious doubt. (See e.g. here for a nice round-up, fsvo 'nice'.)
Back when I first started learning about this stuff, there was an obviously-tricky follow-up question for British people about whether the UK was a net importer or exporter of oil, which seemed to hinge on precisely what one meant by "the UK" and on what statistics one used. Crudely (sorry) it looks like we used to be a net exporter on many measures, but have ceased to be at some point in the last 10 years. But that tricky question is pretty much moot if we have no clear idea about what difference it would make.
Oil prices are down. Is that good news? Previously, I'd have thought that was good news for the economy but bad news for the environment. But if it causes economic contraction, people will drive less and use less energy, which will be good for the environment. I think fish is nice, but then I think that rain is wet, so who am I to judge? I'm starting to wonder whether I should give up the attempt to make any sense whatsoever of the economy. Ideas are being blown out of the water faster than I can get a decent grasp of them, and it's not that we're building stronger alternative models.
As I've said many times now: It's not like we're up the creek without a paddle. We are up the creek and quite unable to agree on what a paddle looks like and what we should to do with it if we had one.
I'd like to be laid back and think that hey, maybe we understand so little that actually we might not be up the creek at all, or perhaps it'll turn out that's not a bad place to be. I'm not one to feel happier having discovered we know less than we thought we did, though, and still less at the prospect of more to come.
This entry crossposted to http://doug.dreamwidth.org/310699.html, where there are
comment(s) not shown here.
That debate's still ongoing, and now it turns out economists don't even agree about things that seem even more simple, like whether cheaper oil/energy prices are a boost or a drag on oil-importing economies. The previously-uncontroversial answer was that cheaper oil is terrible news for net oil exporters and brilliant news for net oil importers. But apparently current market events are making this subject to serious doubt. (See e.g. here for a nice round-up, fsvo 'nice'.)
Back when I first started learning about this stuff, there was an obviously-tricky follow-up question for British people about whether the UK was a net importer or exporter of oil, which seemed to hinge on precisely what one meant by "the UK" and on what statistics one used. Crudely (sorry) it looks like we used to be a net exporter on many measures, but have ceased to be at some point in the last 10 years. But that tricky question is pretty much moot if we have no clear idea about what difference it would make.
Oil prices are down. Is that good news? Previously, I'd have thought that was good news for the economy but bad news for the environment. But if it causes economic contraction, people will drive less and use less energy, which will be good for the environment. I think fish is nice, but then I think that rain is wet, so who am I to judge? I'm starting to wonder whether I should give up the attempt to make any sense whatsoever of the economy. Ideas are being blown out of the water faster than I can get a decent grasp of them, and it's not that we're building stronger alternative models.
As I've said many times now: It's not like we're up the creek without a paddle. We are up the creek and quite unable to agree on what a paddle looks like and what we should to do with it if we had one.
I'd like to be laid back and think that hey, maybe we understand so little that actually we might not be up the creek at all, or perhaps it'll turn out that's not a bad place to be. I'm not one to feel happier having discovered we know less than we thought we did, though, and still less at the prospect of more to come.
This entry crossposted to http://doug.dreamwidth.org/310699.html, where there are
comment(s) not shown here.