12 December 2008

RBA governor shoots himself down in flames

Many economists will be outraged by the following statement made by Glenn Stevens, Governor of the Reserve Bank of Australia, at his address to the Australian Business Economists Annual Dinner:

I do not know anyone who predicted this course of events. This should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. What we have seen is truly a ‘tail’ outcome – the kind of outcome that the routine forecasting process never predicts. But it has occurred, it has implications, and so we must reflect on it.

A number of economists have been warning about this for years, including

It makes you wonder if he listens to anybody outside his board meetings.

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