Working Papers

The Robertson-Keen Wager

Rory Robertson gets ready to send Steve Keen on a long walk:

To make it interesting, I offered Dr Keen a challenge…

On the maybe 1% chance that he is right, and capital-city home prices do indeed fall by 40% within the next five years - starting from Q2 2008, and as measured by the ABS - I will walk from Canberra to the top of Mt Kosciusko (that’s maybe 200km followed by a 2228-metre incline).

If Dr Keen turns out to be less than half right, as I expect, and home prices drop by (much) less than 20%, he will take that long walk. Moreover, the loser must wear a tee-shirt saying: “I was hopelessly wrong on home prices! Ask me how.”

We now have a bet, and I expect to record an easy win within two years.


posted on 28 November 2008 by skirchner in Economics

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Ok, that’s two times you mentioned Steve Keen on this blog.  Its becoming a habit :)

By coincidence I just listened to the whole Keen vs Robertson debate while watching their PPT slides.  Even I’m not completely convinced about Keen’s arguments on the future of Australian housing market.  There are significant differences between here and the US—full recourse loans, under supply of housing, faster population growth, more sane lending practises during the boom etc—but hey, that GDP vs Debt chart of Keen’s is pretty compelling.

The news out of China only gets worse, which means crunch time for the resources boom, our terms-of-trade and national income.  I can’t see anything but higher unemployment ahead, and if it gets bad enough Keen’s 40% drop might be realised.

Posted by .(JavaScript must be enabled to view this email address)  on  11/28  at  04:11 PM

BTW, its been spelled Kosciuszko (not Kosciusko) for more than a decade now, and Canberra is some 564m above sea level, so Rory (or Steve) will have a considerably easier climb.

Lets hope his economics is better than his geography.

Posted by .(JavaScript must be enabled to view this email address)  on  11/28  at  05:47 PM

Will Steve Keen win his daring bet?


Posted by dyork  on  11/29  at  01:45 AM

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