Category Archives: Student Publications

Articles submitted by current students.

RBA/ESA Essay Competition 2016

This year marks the 10th Annual RBA/ESA Essay Competition run in conjunction with UNSW Economics Society. This national competition is open to all students currently enrolled in an undergraduate program at an accredited Australian university.

The topic of the competition this year is economic policy options at low interest rates, particularly relevant in light of contemporary monetary policy stances around the globe. For more information about this years competition check out the link below:

http://www.rba.gov.au/media-releases/2016/mr-16-13.html

Interesting Article

Last week the “2015 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” was awarded to Angus Deaton for his work “for his analysis of consumption, poverty, and welfare.”

A relative dark horse in this competition of economic giants, many unfamiliar with the microeconomist were left asking what exactly he had contributed to the field. Overall, a good grasp of microeconomics may help a fair deal but here is a brief article summing up Deaton’s work, and highlighting just why it’s worthy of one of the discipline’s highest honours.

Economics This Week

Figures release towards the end of this week show that the RBA once again seems to have been proven correct in predicting the peak of the unemployment rate which remained steady at 6.2% due to a slight decrease in the participation rate which nullified a small decrease in job growth. Overall, there was a net loss in full time jobs which was offset by a substantial increase in part-time employment (good news for most uni students, but not so much for those graduating, sorry guys). Interestingly, it should be noted that for the past 2 years the unemployment rate has remained above 6% despite persistent increases in both aggregate hours worked and employment. This seems to be a sign that rather than the economy contracting or remaining stagnant that the economy can’t keep up with the increases in the size of the labour force as more people enter the market.

Of course, the other big news domestically was Westpac’s relatively unexpected increase in interest rates on mortgages. Here are a couple leading theories on why it may have occurred. Firstly, many economists think it was due to the increased capital requirements set by regulators which saw a greater incentive to maintain returns on housing capital by the banks. Secondly, with the RBA’s vocal concerns about housing prices for most of the year, some believe this act was a signal from the private banks that they were willing to de-anchor housing rates from other loans so the RBA would be free to lower the cash rate further. However, on the topic of the housing bubble, the RBA also issued a statement late in the week noting that housing prices were expected to fall notably by the end of next quarter due to the efforts of both themselves and regulators in trying to moderate growth so it may no longer be a factor this time next year.

Overall this week despite everything going on locally the AUD rose substantially against the greenback, rising over USD 0.73 mid week. This was primarily due to an apparent split at the US Fed Reserve regarding expected increases in rates. A great deal of the information coming out of the US and the central bank itself is mixed with some claiming the media has made exaggerated claims of a split while others say it’s being downplayed.

Interesting Article

As some of you might know (and many more probably don’t) at on Monday at 9am Stockholm time the Swedish Royal Academy of Sciences will be announcing the winner of the “2015 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” (or in short the Nobel Prize in Economics).

There’s a long list of contenders for the prize and this article gives a good rundown of who’s who and their chances. Our outgoing VP-Internal Kai Zen has his money on William Nordhaus as a likely candidate for his work in environmental economics. Personally, I think Paul Romer has a strong chance this year, especially given it’s the 25th anniversary of his model’s introduction. We’ll know soon enough.

Economics This Week

On Wednesday the IMF cut its world growth forecast for 2016 by 0.2% after data from the first half of this year revealed growth was only 2.9% rather than the 3.3% expected. But as they say, it’s always easier to get the past right than the future. When outlining possible causes for this decline the IMF pointed the finger at commodity prices which have reached an all time low, having fallen past the GFC nadir some time ago. Add to that the fact that global trade growth has been negligible for the past four years, and now even in decline, then this global trade recession might be a potential explanation.

Despite this, the All Ords finished the week nearly 2% higher at 5304, ending with 5 rises in a row. This oddity also comes in the face of historical record dictating that October is a month of pessimistic expectations and poor performance on financial markets. The AUD has also been stronger against a weak greenback this week, remaining above USD0.70 and even staying above USD0.72 for a brief period.