Luci Ellis: On lags

Remarks by Ms Luci Ellis, Assistant Governor (Economic) of the Reserve Bank of Australia, at the Australian National University, Canberra, 17 August 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I’d like to thank the Australian National University for providing the opportunity to speak to you tonight. ANU is one of my three alma maters, and I’m pleased to be able to engage once again with the university community. It’s important that central banks and the academic community collaborate. We can learn a lot from each other.

I’m conscious that this talk was originally scheduled to take place almost exactly a year ago, but I had to cancel due to illness. That seems especially pertinent on this occasion, because my topic tonight is lags. By choosing this topic, I hope to encourage those of you who engage in economic analysis of any kind, and the broader academic community, to think carefully about time, and in particular, about how the passage of time is built into your analysis.

I want to talk about lags: where they come from; how they might change; and what they might be telling us.

This is more than just an academic point about what our models should look like, though. Understanding lags is central to day-to-day analysis and interpretation of economic developments. As such, they are central to our work in economic policy.