Developing risks from the developing world

Although a sharp rebound in growth in NewZealand looks assured, one significant downside risk remains – a sizableslowdown in Asia.  In this article we discuss some of the capital marketpressures in Asia over recent months, what could go wrong, and why we don’tthink events in Asia will derail growth in New Zealand.

The hidden costs of our GDP and happiness machine obsessions

Recently, I have seen more and more writers rail against gross domestic product (GDP), saying that we need clearer indicators and output targets to set policy with. On one level this is true, GDP is overused and abused. However, these writers are really falling into the same trap as those who excessively obsess themselves with GDP statistics – they are overly focused on specific outcomes, and are ignoring the trade-offs associated with their choices.

It is good to be small

New Zealand is a small country. As the Global Financial Crisis has shown, the whims, fancies, and mistakes of the large economies in our globalised world have a significant impact on New Zealand. However, as New Zealand has outperformed most of the world over recent years, and looks set to keep outperforming, I have learnt that it can be good to be small!

The inflation tax

After a long period discussing tax, we are now up to thevery last tax article!  The last type of taxation we are going to discuss isinflation tax.  Now to do this we cannot just say "inflation is bad".  Intruth, we need to ask how policy actions related to inflation and monetarypolicy can function as a tax, and why (as a result) economists often tend tosteer away from forms of inflation taxation and direct money financing ofdeficits when discussing optimal tax policies.