Bob Gregory on the Mining Boom

Over the weekend I attended the 2011 PhD Conference in Economics and Business at the University of Queensland. This is an annual event held at ANU, UWA, and now UQ that has apparently been running for 24 years. Final year PhD students from across Australia present papers each of which has a faculty discussant. I was discussing Marjan Nazifi's paper on convergence (or lack of it) between EUA and CER permit prices on the European carbon exchange. My student Md Shahiduzzaman was also presenting a paper on interfuel substitution in Australia.

There was also a conference keynote given by Bob Gregory based on his paper with Peter Sheehan on the Australian mining boom. The key figure is this one:



which shows the gap that has opened up between Gross Domestic Income and Gross Domestic Product since 2003 due to the increase in the terms of trade. The increase in prices of minerals have boosted nominal mining income but this isn't reflected in the GDP numbers. I am still trying to get my head around the technicalities of this. It seems to be another case of where you need to be very careful about how national accounts are computed.