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A report to Te Puni Kōkiri.
Increasing exports as a share of GDP is a key government priority. Te Puni Kōkiri commissioned this short report to provide an overview of why exporting is important for Māori businesses, which sectors of the Māori economy might be well suited for export growth, and what Māori firms need to think about as they prepare to enter overseas markets.

This Insight discusses the common pitfalls with undertaking policy development and ultimately writing a snappy, easy to follow RIS.

Assumptions on export elasticities can have a big impact on CGE model results, especially at the industry level. Export elasticities measure the responsiveness of demand for a country’s exports to a change in the world price. The greater the elasticity, the greater the change in export demand following a price shift.  We find that the size of the export elasticities has an important impact on the magnitude of Computable General Equilibrium (CGE) modelling results.

The main reason for the growing income gap between New Zealand and Australia are differences in the quality of management, process innovation and the quality of labour and capital, finds new research released by NZIER. This finding contrasts with the more conventional belief that a lack of capital intensity or differences in mining wealth is the issue.  “When we adjust for differences in the structure of our economy, we find that the income gap with Australia is not so much because it does different things, but because, in the things we do too, Australia does it better”, said Jean-Pierre de Raad, NZIER’s chief executive.
“Only 30% of the productivity gap is due to the structure of the economy. Mining is not the secret to Australia’s success.”
“We also find that capital intensity is not the main thing we should be concerned about, as differences primarily reflect economic structures. Instead, New Zealand’s main problem is the underperformance of industries.”

A report to Metro ITPs.

The group of Metropolitan Institutes of Technology and Polytechnics (ITPs) wishes to better understand the links between education and productivity at an individual and a national level, with a particular focus on vocational education. In this report we conduct a literature search to review the characteristics of ITP students and consider how those characteristics might affect the returns to education. In addition, we identify limitations of the existing data, and recommend what additional data and research would be useful.

Link to the report. (Metro ITPs website)

The National Policy Statement (NPS) on Freshwater Management is a good first step, but it may leave local authorities in the dark about how to meet its intent.

A dynamic Computable General Equilibrium analysis of increased irrigation in New Zealand.
A report to Ministry of Agriculture and Forestry.

We used our dynamic CGE model of the New Zealand economy to estimate the economic impact of 14 proposed irrigation schemes in Canterbury and the Hawke's Bay. The results indicate that by 2035 national GDP would be 0.8% higher than baseline as a result of the irrigation schemes. This calculation takes into account the costs of repaying the debt incurred to build the schemes as well as the flow-on impacts to the rest of the New Zealand economy.  Link to report (Ministry of Agriculture and Forestry website).

Working for Families (WFF) was introduced between 2004 and 2007 to “make work pay” and ensure income adequacy for families with children. The policy has reduced child poverty, drawn an extra 8,100 sole parents into some paid work, encouraged more of them to work 20 hours or more, and reduced the time they receive a benefit. But it also resulted in 9,300 fewer second earners in paid work, and over half of non-beneficiary families with worse incentives to earn more, at an additional cost of $1.5 billion per year.  The objectives are laudable, but we worry about the cost-effectiveness and poor incentives of WFF. To ensure value for money of government spending, it is time to reconsider WFF.

A CGE investigation of increased rates of savings - additional scenarios. An NZIER report to the Savings Working Group, March 2011. The report is available from the Savings Working Group website.
This report to the Savings Working Group follows on from preliminary analysis undertaken by NZIER in November 2010, see NZIER Viewpoint, Working Paper 2010/2.

The Government's infrastructure priorities now need to be reviewed in light of the cost of Christchurch's devastating earthquakes. However, the cost-benefit appraisals of major transport schemes that are likely to form part of the reprioritisation tend to understate the benefits. Thus there is a risk the wrong projects get weeded out or delayed when it would be better to look elsewhere to find the money needed to support Christchurch. We describe the reasons why, and provide some considerations that will help reduce this risk. In the long term we would argue for improvements to methodologies.

A report for Fonterra Co-Operative Group Ltd

The Prime Minister and Trade Minister have announced that New Zealand will be entering free trade agreement (FTA) negotiations with Russia, Belarus and Kazakhstan (RBK) with the aim of concluding talks in 2012. NZIER modelling indicates the FTA will deliver gains of around $27 million to New Zealand.