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To: lorne who wrote (66610)	3/27/2001 5:17:56 PM
From: long-gone	Read Replies (1) \| Respond to of 116768

Is Greenspam saying he knows someone lied to him? Tuesday March 27, 4:23 pm Eastern Time Greenspan Calls for Better Data By MARTIN CRUTSINGER AP Economics Writer %mlink(STRY:; PHOTO:; AUDIO:163%mlink) WASHINGTON (AP) -- The biggest payoffs in efforts to improve economic forecasts are likely to come from raising the quality of the data collected, Federal Reserve Chairman Alan Greenspan said Tuesday. Greenspan said economists need to put a great deal of emphasis on ways to better analyze the output of an increasingly complex society. He said this effort is likely to yield more benefits than trying to build ever-more-complex computer models that attempt to forecast where the economy is headed. ``I suspect greater payoffs will come from more data than from more technique,'' Greenspan told the National Association for Business Economics. Treasury Secretary Paul O'Neill, addressing the same group, expressed hope that Japan will finally take the steps needed to write off bad bank loans and remove barriers that pushed up prices to Japanese consumers. ``I am optimistic that they are finally going to be able to take the action that seems so abundantly clear to us. But they will have to take the actions. We cannot do it for them, nor can the Europeans,'' O'Neill said. O'Neill has accused the Clinton administration of devoting too much effort to publicly lecturing Japan about what the world's second-largest economy needs to do to get out of a decade-long economic slump. Asked about the administration's efforts to overhaul the giant Social Security program, O'Neill said ``the president has indicated he is going to appoint a commission possibly sometime in the next couple of weeks'' to develop proposals to present to Congress later this year. Greenspan made no mention of the Fed's move last week to cut interest rates for a third time in an effort to stave off a full-blown recession. He also gave no hints about future Fed rate moves. Greenspan said that in the 1960s, economists were ``increasingly mesmerized by the possibilities of econometric models as a crystal ball for the future.'' However, he said, it became increasingly apparent that even the most sophisticated computer models had drawbacks in forecasting the future. ``We soon learned that the economic structure did not hold still long enough to capture its key relationships,'' Greenspan said. Greenspan told the group, which represents economists working both for American businesses and government agencies, that while the Fed had found economic models useful, he believes greater benefits in forecasting lie in devoting resources to improving the data collected. He said this effort was critical given that the U.S. economy now features a much greater share of hard-to-measure fields such as computer technology and medical services. ``Over time, and particularly during the last decade or two, an ever-increasing share of GDP (gross domestic product -- the broadest measure of the U.S. economy) has reflected the value of ideas more than material substance or manual labor input,'' Greenspan said. ``In an age of the microprocessor, fiber optics and the laser,'' Greenspan said, the problem of precisely measuring output has grown much more complex. Greenspan said the Fed and other agencies are devoting more resources to improving methods of measuring the economy. ``I am encouraged by the progress that economists and economic statisticians have been making to date in tackling the daunting task of measuring real output and prices in a rapidly changing economy,'' Greenspan said. The Fed last week delivered a third half-point cut in interest rates in an effort to boost demand in such interest-rate sensitive sectors of the economy as housing and autos. The goal is to keep the severe economic slowdown from developing into an outright recession. While Wall Street had been hoping for a bigger interest rate cut, economists are predicting that last week's move will be followed by further rate reductions in coming months. biz.yahoo.com