Wednesday, 21 October 2009

Ministers as random number generators

The Conjurer, by Hieronymus Bosch

I suppose ministers of economics and planning are not supposed to be working as devices for random number generation, but they seem to be doing just that in Venezuela. I know economists (and others) all around the world keep producing predictions that turn out to be wrong more often than they would like to admit, but in Venezuela things are a little bit over the top.

Here you have a chart showing the inflation expectations as stated by the ministers of the current government and as they turned out to be. 2009 hasn't finished yet but we have a better estimate about what the inflation will be at the end of the year.

OK, OK, I see the pattern: they are announcing an inflation rate that is lower than the real one and the Minister line keeps deviating further from the Reality line, so they are not even good fake random numbers, we can have a hunch about what is next.

In general I think journalists should keep big boards with charts next to them so that they can show them to the rambing minister of the moment: and ask "but Señor ministro, do you think you are going to get it more right this time?"

The chart was based, among other sources, on this and this and this and this, this and this.

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