The times are a’changing, as recent macroeconomic fashions are being abandoned and old verities are being restated. Alan Blinder, an American economist, described as ‘one of the great economic minds of his generation,’ was an economic adviser to President Clinton and was a Vice Chair of the American Federal Reserve (central bank). He is known…
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Pretending it can, or that the Reserve Bank of New Zealand can function independently from the rest of the world, could generate a financial crash. The very joining of monetary policy and fiscal policy into a single phrase is a criticism of the neoliberal macroeconomics. The reconfiguration under Rogernomics assumed that the two could be…
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Paper to the Fabian Society, 12 October, 2016 While we continue to chew over the carcass of the Fourth Labour Government – the Lange-Douglas one – we pay little attention to the subsequent Fifth Labour Government. Yet the Clark-Cullen one is greatly shaping the current Labour Opposition and the current National Government. It will,…
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What are the possibilities for the future housing prices? What can we do? Two eminent but retired Reserve Bankers, Don Brash and Arthur Grimes, have argued that house prices should halve. I am not sure whether they actually mean it or are just vividly pointing out that house prices are about double the sustainable level….
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The Reserve Bank cannot deliver affordable housing by itself. Its actions have to be coordinated with the government’s. Unfortunately the monetarist framework of the Reserve Bank Act obscures this. The tensions between the Reserve Bank and the Government over housing policy go back to the mistaken economic thinking in the 1989 Reserve Bank Act. Monetarism…
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A major preoccupation of the budget was preparing for the next major financial crisis. To do so it is reducing government spending relative to GDP. Where do tax cuts fit in? Our politics reminds me those weekly serial movies where each week the heroine ends in an impossible situation but next week she miraculously escapes…
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If it necessary to run a budget deficit then it should be spent in the interests of future generations, rather than on increased consumption to be paid for in the future. It is very easy to demand the government should run, or increase, its budget deficit, that is, it should spend more than its revenue…
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The history of New Zealand is speculation on farm land which stokes up debt, with disastrous consequences when the bubble bursts. The New Zealand industry is going through another one. During the Great War, farm land prices boomed. When farm product prices collapsed in 1920, farmers walked off their land. It was not that the…
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World Sharemarkets Are Sneezing. What Does That Tell Us About the World Economy? Before discussing the state of the world economy – especially what is going on in China – it is useful to say something about the importance of the sharemarket (Americans call it ‘stock market’). It is far more important in pop-economics than…
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The more one is certain about the state of an economy, the more one is likely to be wrong; the more one is certain about the state of an economy, the greater the media coverage. No wonder the public is confused. I shan’t add to the confusion. In quick summary, the New Zealand’s economic growth…
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Also notes for Radio NZ Nights with Brian Crump: 11 August, 2014 The indications are that economic growth is slowing down from the boom rates of the last few years. The slowdown may turn into a contraction – that is, output may fall. There is a view that the contraction began in the middle of 2015. (It is…
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Whatever the answer, what are we going to do about it? Steven Joyce, Minister of Economic Development and most other economic things, was hardly helpful when he dismissed talk of an economic recession on a recent TV3 The Nation on Saturday. Economists outside officialdom can guess what his officials were generally telling him. It probably…
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Whatever the answer, what are we going to do about it? Steven Joyce, Minister of Economic Development and most other economic things, was hardly helpful when he dismissed talk of an economic recession on a recent TV3 The Nation on Saturday. Economists outside officialdom can guess what his officials were generally telling him. It probably…
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We need to distinguish the sovereign state from the people it governs, and the other political institutions between. Things are moving so fast in the financial negotiations between Greece and the Troika (European Central Bank, European Union, International Monetary Fund) that there is little point in my trying to comment on them. But there is…
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There is a lot of chatter about the government’s budget deficit but, politics aside, why does it matter? Rob Muldoon famously remarked that the typical New Zealander would not know a budget deficit if he or she tripped over it in the street. Knowing a little bit about it I have puzzled as to how…
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Why does the Minister of Finance say this is is hardest budget ever? The economy may be doing moderately well, but it is by no means performing outstandingly. In 1993 the New Zealand economy began to show signs of an upswing after the seven years of Rogernomics Stagnation. In a public comment I remarked that…
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Sharp movements in exchange rates often reflect sophisticated speculation. Is there much we can do about it? While the near parity of the Australian and New Zealand dollars got a lot of breathless attention recently, there was little analysis of why it was happening. Explaining the exchange rate depends upon the time horizon. In the…
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One of the biggest issues missed during the election campaign was the sustainability of National’s economic, environmental and even social policies. So what do you do if the government’s not thinking long-term? Pundit: 29 September, 2014. Keywords: Environment & Resources; Macroeconomics & Money; Political Economy & History; Social Policy; Behavioural economics is…
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A softening of the housing market, falling dairy prices and potential weakening of the Chinese economy do not bode well for New Zealand Pundit: 22 September, 2014 Keywords: Macroeconomics & Money; There were knowing smiles among economists when earlier this year John Key set the election date a couple of months early….
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If New Zealand is heading for a housing market implosion, watch what you borrow. Listener: 24 June, 2014. Keywords: Business & Finance; Macroeconomics & Money; Regulation & Taxation; When commentator Jesse Colombo in business journal Forbes said New Zealand had a housing and credit bubble, Economic Development Minister Steven Joyce shot the…
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