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Oil

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marbs:

--- Quote from: costargh on July 17, 2008, 06:13:08 pm ---Looks the goods (Y)
But I'd change

--- Quote ---Part of the governments objective is keeping inflation low, which will help other objectives including economic growth and full employment.
--- End quote ---

to something like

--- Quote ---Part of the governments objective is keeping inflation within this 2-3% range which will help in the achievement of other government objectives such as economic growth and full employment.
--- End quote ---

Also, just wondering. Which inflation rate are you quoting? Because I think it would make a difference whether you were using headline inflation or underlying inflation because I think if you were quoting the underlying inflation rate then your statements after that would be incorrect because the underlying inflation rate would already have eliminated the volatile price changes in oil which would be expressed in a lower inflation rate than that of the headline inflation rate (or at the value of oil would have less of an impact on the change in underlying inflation than it would to headline inflation)

Maybe someone else can clarify that what I have said is correct. Not sure

--- End quote ---

I couldn't find stats for 1990 in mr woods stats, so I found the stats from the New Zealand reserve bank, and others are from woods.

I think I am being too direct in saying the increase in oil price directly effects price stability... I think I might have too discuss the effect the increase has on productive resources, and transport, and how producers might have to increase their prices to account for their losses

marbs:
This is how I said an increase in oil price effects full employment


--- Quote --- Full Employment is a situation in which nearly all persons willing and able to work at the prevailing wage and working conditions are able to find employment. The goals is maintaining the rate as close to the N.A.I.R.U as possible. Recently from 2000 to 2001 Australia achieved relatively good unemployment rates when it decreased all but in 2002 and lowered from 6.4% to 4.6%. With the recent increase in the price of oil which has seen the price of a barrel of crude rise from $US 20 in 2001 to $US130 in 2008, the unemployment rate has begun to increase in the last two years with it now nearing 5%. With an increase in the price of oil it will cost producers more to produce some of their goods and services and the producers may pass this on to the consumers. The fear of higher inflation and the possible raising of Interest Rates, consumers confidence is likely to become lower. With lower consumer confidence, consumers spend less and this lowers consumption. Lower consumer confidence means less aggregate demand which means less economic activity. With less economic activity producers’ chance of making a profit decreases, and cyclical unemployment will increase.
--- End quote ---

costargh:
Marbs, do you know whether you're inflation stats you used are underlying or headline inflation?

I think that would make a big difference

marbs:

--- Quote from: costargh on July 17, 2008, 11:07:55 pm ---Marbs, do you know whether you're inflation stats you used are underlying or headline inflation?

I think that would make a big difference

--- End quote ---

they are both underlying

AppleXY:

--- Quote from: coblin on July 17, 2008, 06:44:59 pm ---In perfect markets, the inflation of oil should not affect efficient resource allocation. It is more the other way around. An inefficient resource allocation causes an inflation (or deflation of oil).

When the oil prices are going up, it is generally going to be because it's moving towards the "correct" and efficient price. Oil is scarce, it's price is supposed to increase.

--- End quote ---

pfft. Every one knows oil is corrupted. Unnecessary pressure is coming from hedge funds speculating in the future markets of Crude oil price increases. In addition, the oil excise by the aust. govt just increases it even more.

It may work in pure free markets, but it's not pure in reality.

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