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The Canterbury earthquakes have disrupted lives and the economy. This Insight brings together key economic indicators to provide a second snapshot of the economic disruption.   We find encouraging signs of stabilisation.

Proust’s À la recherche du temps perdu (In search of lost time) inspired the Proust index in The Economist newspaper of 25 February 2012. The Economist looked across a number of economic measures to see how far back countries have slipped since the global economic crisis. We replicated the Proust index for New Zealand. The recession has cost us dear. In economic terms, New Zealand is now back in 2005.

New Zealand struggles to grow its economy partially due to its small size and remote location. There is little that can be done to change location, but the size can be increased over time. It is feasible to adopt a population policy with the aim of the population reaching 15 million in the next 50 years – an annual growth rate of 2.5% per annum. This would bring the size and density of the population to levels closer to more prosperous European countries. Fifteen million – two and a half times current projections – is a good target, too, as it allows for several large cities, fostering competition within New Zealand.

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.

Do you get the sense that New Zealand doesn’t invest in the major public infrastructure facilities like we used to? Previous generations built entire networks for rail, road, water and energy. Only Muldoon’s Think Big projects and the current ‘Roads of National Significance’ might compare. Major infrastructure investment decisions come down to how much we care about our future, and the future of our children and grandchildren. The government’s social discount rate policy captures in a single number how much decision makers care about the future relative to today. The default public sector stance is to use an 8% real (i.e. net of inflation) discount rate. But is 8% right?

The Canterbury earthquakes have disrupted lives and the economy. This Insight brings together key economic indicators to provide a snapshot of the economic disruption. The true cost of the disaster will not be known for some time. The immediate clean-up and reconstruction is boosting demand in certain sectors like utilities, construction, safety, healthcare and social assistance. These have not fully offset reduced activity in other sectors.

Performance indices are used worldwide as indicators of activity in key sectors to assist analysts and decision-makers. An advantage of these indices is that, by pooling information from the series that make up the indices, idiosyncratic variation is smoothed out, and a stable and potentially more robust indicator of direction is constructed. Our study shows that individual sector diffusion indices from the QSBO are both good coincidental and leading indicators of economic activity.

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.

Forecast - New Zealand trends in property and construction. Prepared by NZIER exclusively for Rider Levett Bucknall.

An occasional column for the Dominion Post newspaper.

Unemployment in the most recent recession never reached the hurtful heights of the early 1990s. It is now hovering around 6.5 percent. This is not scary by international standards. But the headline figure obscures an uncomfortable fact.  The unemployment rate among those without formal qualifications is about 10.5 percent.

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)

NZIER’s Quarterly Survey of Business Opinion (QSBO) is one of New Zealand’s leading economic indicators. March 2011 marked the 50th anniversary of the QSBO. The QSBO provides data driven insights into how firms are responding to current economic events. Due to its reliability and responsiveness compared to related official statistics, the QSBO has become a key indicator for businesses and policy-makers. Over the past 50 years a significant number of New Zealand economists have contributed to the evolution of the QSBO.