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Author's Name: Fabrizio Carmignani
Date: Tue 12 Feb 2019

Fabrizio Carmignani

Professor Fabrizio Carmignani

Fabrizio Carmignani is a Professor of Economics and Head of the Department of Accounting, Finance and Economics at Griffith University. He holds a PhD from Glasgow University.  Between 2002 and 2008 he worked for the United Nations as chief economist of the Central African Office of the UN Economic Commission for Africa and first economist in the Trade Finance and Economic Development Division of the same Commission. He was also an economist in the Economic Analysis Division of the UN Economic Commission for Europe. In 2009 he joined the School of Economics of the University of Queensland and in 2012 he moved to Griffith University. He is also an Executive Director of the Economic Society of Australia (Qld Branch) and regularly works as a consultant to international institutions. His areas of expertise include macroeconomic policy, applied economics and econometrics, economic development and growth, natural resource economics, and conflict economics. He has published extensively in international academic journals and he often contributes commentaries and open editorials to Australian media on economic issues such as the state of the Australian and Queensland economy, the G20, and the European Debt Crisis.

Subject Area Expertise

Applied and empirical macroeconomics, business cycles and macroeconomic policy, economic development and growth, economics of conflict, political macroeconomics.

Website

https://www.griffith.edu.au/business-government/griffith-business-school/departments/department-accounting-finance-economics/staff/professor-fabrizio-carmignani

 


Responses (22)


Professional Accreditation of Economists - March 2019

Poll 36

Proposition 1: "Professional accreditation for the economics profession would attract more people to economics as a career."

Proposition 2: "The benefits of professional accreditation for current and prospective economists would exceed any possible costs"

 

Part 1 - Disagree

8

Part 2 - Uncertain (neither agree nor disagree)

6

In relation to proposition 1, my view is that attracting more people to economics as a career is not (primarily) a matter of establishing a professional accreditation. This does not mean that a professional accreditation could not help, but certainly it would not be a game changer. The key to attract more people to economics lies elsewhere, i.e. in our ability as economists to explain to the community, employers, and general public what we do and why; in our ability to show that the skills and logic acquired through studying economics can be applied to a large variety of professions and industries. I do not think that just establishing a professional accreditation would help us do that. In relation to proposition 2, I am uncertain because the balance between costs and benefits would significantly depend on how we design the professional accreditation, particularly in terms of enforcement mechanisms. Thinking about costs and benefits in abstract is a bit difficult and hence I am not comfortable providing a more specific answer.


Banking Royal Commission and the Credit Crunch - October 2018

Poll 33

Proposition 1: "There is a significant risk that, either as a result of the findings and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry or as a result of the financial institutions' response to those findings, credit will become less readily available to Australian households or businesses."

Proposition 2: "Assuming credit becomes less readily available to Australian households or businesses, this will in turn have adverse consequences for the performance of the Australian economy."

 

1 - Uncertain (neither agree nor disagree)

2 - Disagree

1 - Uncertain here is the average between two considerations of opposite sign. First, yes there is a risk of credit becoming less readily available to Australian households and business. (But) Second, I do not think that the Royal Commission is the main factor driving this "credit crunch". The borrowing capacity of property investors was declining well before the publication of the interim report. Also, the report points to very important misconduct issues whose correction will have long-term benefits. The possible tightening of credit conditions in the short term is the price to pay for this necessary correction. Finally, part of the short term decline in the volume of credit available from banks might be offset by an increase in credit from other (non-bank) financial institutions.

2 - Following from my answer above, I do not see how the report in itself can have major, long-lasting negative effects on the performance of the Australian economy. This does not mean that the outlook for the Australian economy is without risks, but these are not primarily arising from the report.


Sugar sweetened beverage tax for Australia - July 2018

Poll 31

Proposition 1: "The best economic policy instrument available to policy makers seeking to address obesity and related health issues in Australia is the introduction of a tax on sugar sweetened beverages (SSBs)."

Proposition 2: "The health and non-health benefits from a tax on SSBs are likely to outweigh the possible costs felt elsewhere in the economy."

 

1 - Uncertain (neither agree nor disagree)

2 - Agree

1 - It is difficult to say that the tax is the "best" available instrument. It is certainly an instrument that should be considered and used, but it is not a silver bullet and should probably be seen as part of a broader package of measures targeting consumption habits. So, while I am strongly in support of the introduction of the tax, I cannot equally strongly agree with the statement that the tax is the best instruments available.

2 - There is a voluminous empirical evidence suggesting that these taxes are effective in reducing obesity. On the other hand, this tax is probably regressive. In practice, given the weight of SSB in the consumption basket of individuals, the adverse effect on poorer individuals should be small and most likely recovered through improved health outcomes. Producers also claim that the tax would result in a loss of jobs due to reduced demand. I am not aware of specific estimates in this sense, but one could argue that if the expenditure is reallocated from SSBs to other products, then increased demand for these other products should also lead to increased labour demand, so that the net effect of the tax on total employment should be in the end negligible.


Australian Federal Budget 2018 - Reduce government debt or provide tax cuts? - April 2018

Poll 28

Proposition 1: "Slowing the growth in the debt to GDP ratio should be a priority for Australian governments."

Proposition 2: "Slowing the growth in the debt to GDP ratio is a higher priority than income or corporate tax cuts."

 

1 - Uncertain (neither agree nor disagree)

2 - Agree

1 - While of course nobody would claim that we should let the debt to GDP ratio grow, theory and empirical evidence suggest that out current level of debt to GDP ratio is (i) sustainable and (ii) well below the threshold past which debt could slow down economic growth. In this regard, slowing the growth of the ratio is not a top "priority" for the government.

2 - If the choice is between slowing the growth of the debt to GDP ratio and cutting taxes, then the debt to GDP ratio comes first. This is because cutting taxes is not a priority, particularly company taxes. However, I should remark that both the debt to GDP ratio and cutting taxes are significantly less of a priority than increasing spending on public goods and infrastructure. According to poll reported in The Australian on 24 April, voters seem to be very clear about this order of priorities.


US corporate tax cuts - March 2018

Poll 27

"The recent US corporate tax cuts will have no impact on investments in and capital flows into Australia."

 

Agree

8

Investment in Australia is mostly driven by factors other than taxation. For instance, mining companies invest in Australia because we have minerals and a change in the US tax rate is not going to alter this. Therefore, the worst possible thing that we could do is to decide that we need to cut our own corporate tax rate in order to make our economy more attractive to foreign investment. This would not increase our competitiveness by one bit, but it would surely have a negative impact on the budget and lead to a cut in the supply of public goods and services. The ultimate result would be more inequality and slower growth.


Journalism as a public good - January 2018

Poll 25

Proposition 1: "The modern phenomena of information overload and social-media-fuelled 'fake news' bring into focus the value of quality journalism. Quality journalism has a public-good dimension that warrants public support."

Proposition 2: "The Australian government presently provides funding for the ABC and SBS, Australia's independent public broadcasters. The Australian government should increase its financial support of quality journalism."

 

1 - Agree

2 - Agree

1 - I agree with the general principle embedded in the proposition. The value of quality journalism as a public good now that there is such widespread access to incorrect and fake information through social media is even higher than in the past. However, I also have to acknowledge that implementing the principle of the proposition is difficult: who establishes what quality/good journalism is? How do we guarantee the plurality of views?

2 - For the same reasons, and with the same qualifications provided in my comment to proposition 1.


Public borrowing for infrastructure investment - September 2017

Poll 22

"As interest rates are at low levels by historical standards, federal and state governments, despite their public debt levels, should be borrowing more than they currently are to invest in infrastructure"

 

Disagree

8

The statement is problematic in two respects. First, borrowing to finance infrastructure is not just a matter of opportunity relative to the level of the interest rate. It is also a matter of quality of the available investment projects: the government (federal or local) should borrow "more" if there are good investment projects in which to invest; not just because the interest rate is low. This also means that if the interest rate werre to increase, but good infrastructure projects are still available, then the government should continue to borrow to finance those projects. Second, the question seems to build on the idea that the only "good" debt is the debt incurred to finance infrastructure. I am not comfortable with this idea. Again, whether the debt incurred to pay for infrastructure is good or bad depends on the quality of the infrastructure projects; it is not always good and it is not always bad. At the same time, there can be plenty of "good" debt that is not related to investment in infrastructure.


Gender diversity in the workplace - role of government? - June 2017

Poll 19

"The recent Parliamentary Inquiry into "Gender segregation in the workplace and its impact on women's economic equality" was asked to examine measures to encourage women?s participation in male-dominated occupations and industries. Although there is growing awareness of the productivity gains of gender diversity, the private market alone is unlikely to steer the Australian labour market toward gender equality in male-dominated industries. Breaking down gender segregation in the labour market can only be achieved with some degree of government intervention."

 

Agree

8

Government intervention is necessary, I agree. However, the issue is then what kind of government intervention should be used. For instance, quotas in my view do not necessarily address the cultural change that is required in male-dominated industries. I am strongly in favour of interventions that (i) eliminate any form of discrimination in the recruitment and selection process and (ii) support women's participation in the labour market, thus giving them equal opportunities as men to be selected for any jobs.


Australian Federal Budget 2017 - Outsourcing Economic Forecasting - May 2017

Poll 18

"Given the Commonwealth Treasury?s ongoing difficulty in making accurate forecasts of some of the key economic variables underpinning the Budget ? in particular nominal GDP growth ? the Government should ?outsource? the economic forecasts used in framing the Budget to an independent agency (such as the Parliamentary Budget Office), as now happens in the United Kingdom."

 

Disagree

8

We should find ways to improve Treasury's forecasts rather than outsourcing forecasts to other agencies/offices, which could also make significant mistakes. I also do not believe that outsourcing is necessary to address an issue of 'independence', because the very notion of independence here is vague and controversial. This of course does not mean that the forecasts of the Treasury should not be analyzed, discussed and compared with forecasts from other offices or agencies. But, again, this discussion ought to be constructive and help the Treasury improve their forecasting models.


Economics teaching - micro before macro - February 2017

Poll 15

"It is more effective to teach an introductory course in micro-economics first before an introductory course in macro-economics."

 

Disagree

8

It is an interesting question with no simple answer. If we are talking about a first year course in a Bachelor of Economics, then the answer is probably yes: micro first and then macro is likely to be more effective, albeit I would still devote the first couple of sessions of this course to the presentation of a broader macro picture of economics. But if instead we are talking about a first year course that goes into programmes like the Bachelor of Commerce or the Bachelor of Business, then the answer is no: micro first is not necessarily the best approach. This is because for most of the students in the BCom or the BBus, the first year course in economics will be their only exposure to economics. In that case, I think it would be better to have a course that tackles the "big" issues: growth, unemployment, inflation, debt, etc..., and this necessarily will have to be a more macro course, with possibly a few sessions on the micro fundations of the big issues.


2016 US Election - November 2016

Poll 13

"Hillary Clinton is likely to be the superior US presidential candidate for the Australian economy and for Australia."

 

Agree

9

Even if the effects of US economic policy on Australia are indirect and probably less strong than the effects of Chinese and (possibly) Japanese economic policy, I think that the question is relevant. The answer is unambiguous: Hillary Clinton is the superior candidate. Period. Donald Trump's economic policy plan (at least for what we have seen and heard in this campaign) is a mix of autarchy and tax cuts which will damage the US economy, increase inequality, and ultimately send a disrupting shock wave across the global economy. Australia (or the rest of the world, for that matter) certainly does not need that.


Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.' Part 2: 'It is unethical for governments to use behavioural economics to

The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy.

 

Strongly agree

9


Behavioural economics - September 2016

Poll 11

Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.'

Part 2: 'It is unethical for governments to use behavioural economics to "nudge" citizens.'

 

PART 1 - Disagree

8

Behavioural economics is a tool, so the only relevant question is whether this tool is used to improve social welfare or not. In this sense, the use of behavioural economics is not ethical or unethical in absolute sense.

PART 2 - Disagree

8

Behavioural economics is a tool, so the only relevant question is whether this tool is used to improve social welfare or not. In this sense, the use of behavioural economics is not ethical or unethical in absolute sense.


RBA economic growth targets - August 2016

Poll 10

"The Reserve Bank of Australia should be tasked with targeting nominal economic growth rather than inflation."

 

Strongly disagree

9

The RBA (or any central bank for that matter) should certainly not be tasked with targeting long-term growth (nominal or real). This is such a well established result in the academic literature and policymaking practice that I do not think anyone can realistically argue the opposite. If instead we refer to the short-term, then the RBA might play a role in stabilizing output; that is, in using the monetary policy instrument counter-cyclically to smoothen cyclical fluctuations. But even then, this does not mean targeting nominal growth rather than inflation. Finally, the RBA has already done a lot to stimulate the business cycle in this phase of contraction. Further interest rate cuts are unlikely to have any significant impact on output. Instead, it is now up to the government to do more to support the recovery and, even more importantly, to create conditions for sustained long-term growth.


The Brexit - impact on UK citizens - July 2016

Poll 9

"Assuming it is implemented, Brexit will deliver net economic benefits, on average, to UK citizens within its first 5 years."

 

Strongly disagree

9

There is simply no valid economic argument (theoretical or empirical) to support this statement. Brexit advocates have produced some estimates based on highly simplistic (and somewhat unrealistic) post-Brexit scenarios and very generous assumptions on gains from reduced trade diversion and reduced contributions to EU budget. Instead, a more comprehensive, realistic, and theory-based analysis by the UK Treasury shows that Brexit will result in significant GDP losses in the long-term.


Spend on education or business tax cut - June 2016

Poll 8

"Australia will receive a bigger economic growth dividend in the long-run by spending on education than offering an equivalent amount of money on a tax cut to business."

 

Agree

9

One thing about the premise of the question: spending on education and cutting business taxes do not have to be mutually exclusive. They become mutually exclusive only if take the view that fiscal policy is about minimizing government and stabilizing the budget at every single point in time. If instead we acknowledge that the ultimate purpose of fiscal policy is to increase the welfare of the community, then the trade-off between spending on public goods and supporting businesses disappears. Having said that, if hypothetically we had to make a choice between the two, then it seems to me that the empirical evidence is quite clear. Expenditure in education has a larger payoff (in fact, the empirical evidence on the growth and welfare benefits of cutting business taxes is very weak). More and better public education fosters the process of innovation (which drives economic growth in the long term) and leads to a dynamically efficient redistribution of opportunities (which guarantees that growth is inclusive).


Budget 2016-17 - Returning to surplus - May 2016

Poll 7

"The recently released 2016-17 Commonwealth Budget projects that the Australian Government's underlying cash balance will return to surplus by 2020?21*. Australian politicians should rebalance the budget with greater urgency."

 

Strongly disagree

10

The obsession for balancing the budget has made already enough damage (in Australia and overseas). The fiscal multiplier in Australia is greater than 1, so fiscal policy should be run counter-cyclically and the budget should stay in deficit as long as the economy is in a contraction (as it is the case now: the output gap is still significantly negative). Those who urge the government to balance the budget make two mistakes. First, they forget that the budget is a tool; hence balancing the budget cannot be the ultimate goal of fiscal policy. Second, they forget that debt sustainability is a matter of economic growth. The only thing that could make debt unsustainable in Australia today would be the decision to rebalance the budget in a time of economic contraction.


China services boom for Australia? - April 2016

Poll 6

"As the Chinese economy makes its transition from investment-led to consumption led growth, the Australian service sector which currently accounts for around 20% of total exports, will produce a second 'Chinese economic windfall' for Australians."

 

Agree

9

I agree, but with an important qualification. The transition of China towards a consumption-led economy with a growing middle-class will not automatically result in a windfall for Australia. The potential for a windfall is there (Chinese demand for Australian services is growing at an impressive rate and the value-added in services exports is higher than from other sectors), but there is also strong and growing international competition ready to take advantage of increased demand for services coming out of China. Australian policymakers need to acknowledge that this time is not going to be as easy as it was for resources. I wish to acknowledge discussion with James Laurenceson at the Australia-China Relations Institute on these issues.


Efficiency of tax incentives - February 2016

Poll 4

"New tax incentives for investments in technology and innovation businesses and start-ups are likely to be inefficient."

 

Disagree

9

Tax incentives are not necessarily inefficient; hence my disagreement with the statement. Obviously, depending on how incentives are designed and implemented, they might be inefficient. This is particularly the case when the government uses selected incentives to pick winners ex-ante and/or when incentives are not linked to some form of performance assessment based on clear and transparent benchmarks. So, in my view, the point is not whether tax incentives are efficient or inefficient in absolute terms, but rather how they are designed and what kind of governance mechanisms are established to support their implementation.


Penalty Rates Reform - November 2015

Poll 2

"Aligning Sunday penalty rates for hospitality, entertainment and retailing industries with the current levels for Saturday, as proposed in the Productivity Commission's draft report, will lead to more employment and greater availability of services in these industries on Sundays."

 

Disagree

8

I think there is not enough evidence in the PC draft report (or anywhere else) to conclude that Sunday penalty rates should be lowered. The fact that there is increasing demand for services on Sunday does not imply that workers should be paid less to provide those services. In fact, one would argue that workers should be paid even more. If the logic underlying the PC's draft report were applied to emergency services (which citizen would like to access 24/7), then what should the salary of a doctor in the ER or a policeman on duty on Sunday be ? I have an additional concern: if longer opening hours on Sundays imply that consumers spend more time and money at cafes and restaurants on Sundays, then the volume of business of these shops in weekdays might decline. If this happens, than the net effect on employment becomes even more difficult to predict.