Voting too often: Malcolm Turnbull has called a double-dissolution election for July 2. Credit:Louie Douvis Which stands to reason. Why make a decision that's costly to reverse if you don't know how things are going to turn out? Such decisions include big purchases and putting on workers. His index is one of the strangest ever to come out of the bank. Much of it is made up of articles from The Australian Financial Review, The Australian, The Sydney Morning Herald and The Age going back to the 1980s. To be regarded as a sign of uncertainty the article needs to contain both the words "economy" and "uncertain" plus at least one of the words "budget", "policy", "legislation", "Parliament", "Senate'" or "Reserve Bank". Measured as a proportion of the total articles, this part of the index jumps at predictable times, including at and before elections. The papers most likely to spout uncertainty are the Financial Review, and the Australian. The rest of the index is made up of sharemarket volatility and the dispersion of sharemarket analysts' forecasts. They move pretty much in line with stories about uncertainty in the newspapers.

Election-generated uncertainty was at its highest in the tightly contested elections of 2010 and 1998. In 2010 with the outcome uncertain even after the vote, the uncertainty dragged on, as it will this time during the eight-week campaign. It's already started. Turnbull has claimed Labor's negative gearing policy would take a "sledgehammer" to the property market. His immigration minister Peter Dutton said it will bring the economy to a "shuddering halt" and make the sharemarket "crash". (Never mind that the best guesses are that would take a few percentage points off house prices, which is exactly what's needed to make houses more affordable.) The possibility that their own campaign could dent the economy and hurt their chances might not have occurred to them. If that happens, there's a chance they will step up their rhetoric, and damage the economy further. Between now and July 2 there will be two more sets of unemployment figures, one set of retail sales figures, one set of business investment figures and one set of economic growth figures, each collected in real time as the effects of the campaign and its build-up become apparent. It wouldn't be a problem if the outcome of the election was certain (as it seemed to be when Turnbull took office). In another fascinating study entitled Better the Devil You Know: The Influence of Political Incumbency on Australian Financial Market Uncertainty Curtin University economist Lee Smales concludes that the more likely it looks that the incumbent will win (especially if it's the Coalition) the less likely the campaign is to do damage.

The possibility that their own campaign could damage the economy and hurt their chances may not have occurred to them. The campaign that's about to begin is as hard to predict as they get. Friday's 7News ReachTEL poll puts the two party preferred vote at 50:50. If the rhetoric gets incredibly overblown, it might push the Reserve Bank over the edge and make it cut rates during the campaign. It's as good as certain to cut rates again (because of ultra-low inflation), and the market expects a cut by August. But one-third of the market now expects a cut in June, halfway through the campaign. The logic is that if economic indicators falter in addition to the inflation indicators, the case is unarguable. To delay would itself be political. The bank moved rates in 2007 and 2013. It would be cutting because the economy was weak and the campaign had made it weaker. The Prime Minister would say it was because he was doing a good job.