By Diwa C. Guinigundo
Before the end of 2020, columnist professor Tyler Cowen in Bloomberg Opinion wrote that “it is not likely that the next major macroeconomic problem will be inflation.” At least in the US, he argued that inflation “has come in the form of lower quality, not higher prices.” His illustrations were very interesting. While schools have not increased their tuition fees, students are challenged by on-line learning. Getting treatment in a hospital or eating in a restaurant is more often than not accompanied by fear and inconvenience.
We can relate to these American experiences. They are very real in the Philippines. However, there is another side to Cowen’s argument. Other economists like University of Michigan’s Justin Wolfers, writing for
Keep GCQ: Setting fire to our ship…
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Social loafing in the time of COVID-19
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New techniques of predicting growth have proliferated recently. The Bangko Sentral ng Pilipinas (BSP), for instance, has added to its suite of forecasting models, “nowcasting” models, to estimate growth as a measure of domestic demand in formulating monetary policy. The results of these quantitative exercises are exclusively for internal use but BSP’s performance has been satisfactory. Its business cycle model, business and consumer expectations surveys, as well as high-frequency data monitoring have also supported its macroeconomic surveillance.
Other central banks have similarly embarked on nowcasting because relying on quarterly economic and financial data with long lags and frequent revisions would serve very little purpose. Nowcasting yields economic estimates in virtually real-time in lieu of the official measures. Many advanced economies have shifted to this methodology following the exponential improvements in computing power. For instance, the R