Row as York Keeps its SHMA Secret – Despite Agreeing local Plan

The Press York

THE Government has told York’s leaders to be “open and transparent” about their city vision or face a public backlash, as a secrecy row intensifies.

The Liberal Democrats and Labour have clashed over the latter’s refusal to make public a consultants’ report, which is said to have been used to justify controversial housing plans.

Labour wants to build 22,000 new homes in York by 2030 and has outlined its proposals in the draft Local Plan. But they say the report by the consultants, Arup, can remain secret for now because it is only a draft report. New laws introduced last year say any background papers on key decisions must be made public.

Lib Dem councillorNigel Ayre said residents were being “treated with contempt” and said the council may have “a legal as well as a moral case to answer”.

He said: “It is a scandal that the publication of this taxpayer-funded report, which is cited as key evidence and should have been published before the cabinet decision was taken to support the draft Local Plan, is still being delayed.”

The Lib Dems are now considering taking the matter to the Local Government Ombudsman. They questioned making key decisions on the basis of a draft document and said a request to council officials and a Freedom of Information Act request had been rejected.

“Decisions about what goes into these plans should be open and transparent, including the evidence being used. If local people feel this isn’t the case, they should hold their council to account.”

Andy Docherty, the council’s assistant director of governance, said the authority recognised its legal duty to publish such papers, but said: “Any documents which are only in draft form are ‘excluded’ from this requirement.

“The Arup report is not classed as a background document because it is in draft form. All documents related to the Local Plan will be published as part of the consultation starting on June 5.”

The Labour-run council has launched a public consultation on the plans.

The Local Authorities (Executive Arrangements) (Meetings and Access to Information) regulations state “background papers must be available for public inspection” and it is illegal for councils to withhold them except in “special cases”.

Former council leader Steve Galloway said the exceptions did not apply as the Arup report was intended for publication, and said it was “not good enough” for it to be published after a decision had been made.

No the Negro DGSE model does not Predict the Great Recession

A great deal of chatter on the blogosphere on a paper by Negro, Giannoni and Schorfheide  of the NY Fed that DGSE can predict the great recession.  Noahopinion discusses it the day after he mused about what use was DGSE.

What they do is take the most well known New Keynsian model Smets-Wouters (2007) New Keynesian model and add on the  the “financial accelerator” model of Bernanke, Gertler, and Gilchrist (1999).  In the Financial Accelerator model credit shocks transmit through the real economy through amongst other reasons undermining the value of collatoral.

Both Noah and Mark Thoma’s reaction is ‘pah’ we could have predicted the Great Recession all along, we knew how we just didnt put two and two together’.  But the Negro et al. is not a ‘forecast’  had they had the model in  2007 they would not have predicted the Great Recession.  This quite apart from the criticism made by some commentators that they have engaged in post-hoc calibration of parameters to fit the result.  I don’t make that accusation simply that the result forecasts nothing because their baseline data

begin[s]  by estimating the DSGE model… based on macroeconomic data from 1964:Q1 to 2008:Q3. ..A forecaster in the fourth quarter of 2008 would have observed the Lehman collapse and have had access to current-quarter information on the federal funds rate and the spread (pg 13)

That is they take a pre-existing credit shock and project its results forward.  If the Credit Accelerator theory is correct then it is no surprise that the results are broadly accurate.  What the model does not do and cannot do is predict the causes of the Lehman collapse, the financial conditions that caused the ‘shock’ and overall fragility in the system (implicit in the baseline data).  In other words as a predictor of the recession it has no value, as a predictor of events AFTER the commencement of the great recession it has some value.

So we are back in the mathematical dark ages introduced to Economics by Friusch, where steady cycles can only be disturbed by ‘Shocks’ – such as too many people going on holiday at once.  The rest of the applied mathematical modelling community has long abandoned this approach for a systems dynamics based approach where modelling of state can create limit cycles and chaotic breakdown of stable systems  (see this paper for the mistake Frisch made in criticising Kalecki’s dynamics).

Moreover even if the Financial Accelerator theory is correct the DGSE approach cannot tell us about the direction and strength of causation.  This Bayoumi and Darius paper argues convincingly

instead of changes in the value of wealth driving bank lending, our empirical results imply that in general changes in willingness of banks to lend (often associated with changes in bank capital used to provide a cushion against lending) drive wealth.

So get over DGSE and properly model mathematical state, including net credit and debt of agents.  Mark and Noah, get around to reading some Wyne Godley and begin to understand why such stock-flow consistent models did predict the great recession.