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On Sat, Oct 04, 2008 at 07:31:45PM +0100, Tom Potts wrote: > > Silly question perhaps but modelling what? > Er .. the Economy - money flow etc. > The sort of thing that, when you plug in cancelling the 10% tax band would > leave 2million out of pocket. > The sort of thing that would say - oh house prices are collapsing so $200 > trillion of leveraged 'capital' will evaporate. > The sort of thing you would expect an olevel government to have so it would > get an idea of the effect of its economic policies - not 100% accurate but > like a short range weather forecast. > I heard in the early 80's that the treasury used 3 computer models to predict > economic consequences. 2 had keynseyan ideas in them so, even though they > were better at predicting the future, Maggie had them ditched. > I know this sort of thing would be a double edged sword but the lack of > evidence of ones existence seems to be a tad worrying! Even the betting > companies have neural networks to keep them ahead of cheats - sorry smart > punters. > Tom te tom te tom > Ack.... Some of what you are asking is relatively simple eg the cancellation of the 10% tax, and the house price collapse: The cancellation of the 10% tax band was a political gesture that was not thought through. (Google for 10% tax fiasco: there were 2.9m hits) House prices and leveraged capital: that is also easy to explain. If the population of England is growing at 2% a year then presumably demand for housing is also growing at 2% a year, which means house prices will go up with inflation. Unless of course everyone in UK then wants more than one home, in which case demand will increase until everyone has their second home and then prices will fall. Moving from that to asking what should be the economic policy be is then a bit harder because a lot depends on what you feel the policy should do. However if you look at http://www.bankofengland.co.uk/monetarypolicy/how.htm then the key factors seem to be: - The level of asset prices (houses, stocks, interest rates) - Consumer confidence and level of domestic and foreign demand - Inflationary pressure and import prices The interplay between the factors is a matter for regression analysis. How accurate historical correlations are for future changes is a moot point. -- Henry Photocopies or faxes of my signature are not binding. Electronic documents (including email) are binding if digitally signed and appropriately verified PGP Key : 0x854F8D8D Sat Oct 4 23:02:47 BST 2008
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