Identifying BubblesIdentifying Bubbles

Jason RussoJason Russo

Assistant StatisticianAssistant Statistician

Economic Analysis and Reporting BranchEconomic Analysis and Reporting Branch

Australian Bureau of StatisticsAustralian Bureau of Statistics

OverviewOverview

Exploring the notion of 'bubbles' Some Australian experience Current work by the ABS Conclusions and suggestions for

discussion

SNASNA The current state of the art in

asset valuation. A quick return to 'first principles'

for NSOs. SNA broadly says:

Opening balance pluschanges due to transactions plusother changes (eg, volume and revaluation) equalsClosing balance.

SNASNA But SNA is more, it also provides:

The framework for NSOs to record the sectoral balances of households, government, financial and non-financial corporations.

An important tool in monitoring the ability of an economy as a whole to deal with adverse macroeconomic shocks.

Of course there will be gaps in measurement, dependent on country context

The Notion Of BubblesThe Notion Of Bubbles

Meltzer's distinction

Rational v's irrational bubblesThere is not agreement in the way that NSOs would like...

In practice, this distinction makes no difference...we are measuring market prices, not predicting them.

Australian ExperiencesAustralian Experiences

Australian ExperiencesAustralian Experiences

Australian ExperiencesAustralian Experiences(ABS Established House Price Index)(ABS Established House Price Index)

Australian ExperiencesAustralian Experiences(ABS Established House Price Index)(ABS Established House Price Index)

Australian ExperiencesAustralian Experiences

Australian ExperiencesAustralian Experiences

Australian ExperiencesAustralian Experiences

Australian ExperiencesAustralian Experiences

Australia & the GFCAustralia & the GFC(source: www.budget.gov.au)(source: www.budget.gov.au)

Australia & the GFCAustralia & the GFC

Australia & the GFCAustralia & the GFC

ABS WorkABS Work

Engagement with users

User groupsSystemic reviewsAn ongoing dialogue (eg, quarterly liaison)

ABS WorkABS Work Further work

Development of ABS House Price IndexAspirations to further develop our statistics on 'balance sheets'

Review of Financial Statistics - internal and external systemic review

Responding to previous reviews (eg, the recent IMF ROSC, 2010)

Themes for discussionThemes for discussion

Important to keep asset price developments in context

The need to maintain good institutional settings around statistics

Coherence and accuracy a priority Vital to maintain engagement and an

ongoing work program that is relevant and responds to emerging needs