Matt Nolan

Did the July FPI tell us food price growth was starting to cool?

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According to this Herald article the fact that annual food price growth fell from 8.2% to 7.6%, and the fact that increases stemmed from a lift in fresh vege prices implies that food price inflation is now cooling. Lets investigate this claim a little bit. (Note: I am ignoring the title “Relief on way for families as record food costs set to ease” as it is just silly – the economist they interview says food price growth will ease to 4%, not that the actual cost is going to ease.)

First the fresh vege claim. Lets try to remember here the the food price index is not seasonally adjusted. As a result there is an increase in these vege prices every July. To account for the seasonal pattern we can compare how much vege prices were up on a year earlier – in June they rose 8.7%, in July 5.4% (source). As a result, blaming vege’s for the increase in the food price index seems a little dishonest.

Now that we know this, we can just discuss the deceleration in annual food price growth.

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Matt Nolan

Happiness, policies, and economics

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It is good to see the Frog Blog discussing happiness and policy – as fundamentally the goal of policy should be to promote the highest social happiness, not necessarily to promote the largest GDP number.

The article that Frog links to can be found here, and on Saturday there was an article in the paper by Chris Worthington on the subject as well. However, I get the feeling that Mr/Mrs/Miss Frog interprets this policy implication a little differently to me (and both are different to this previous post) – lets discuss.

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Matt Nolan

Technology and resources: The value judgments

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Technology and the limited nature of non-renewable resources is an important issue in economics, the social sciences, and general policy making. It is an issue where each side of the political spectrum feels that the other side is stupid.

In an article we have linked to here, there are people that feel economists ignore the concept that our natural resources are limited (something that would be quite a fail, given that economics is the study of scarcity). However, there are also many people that feel a stroke over-confident about the ability of “technology” to evolve in a way that will allow us to substitute, easily, and cheaply away from these resources when the time comes.

In truth many people sit between these two extremes, believing that non-renewable resources will run out, there will be some cost, but that technology will provide some type of substitute. However, the value judgments involved in this opinion, especially when looking at technology, are not entirely clear. As a result, lets have a look at “technology” in more detail and see what framework we can come up with.

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Matt Nolan

Think Big and the balance of payments

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When I was listening to Radio NZ on Sunday I heard some people discussing why they thought “Think Big” was a good idea.

Although I agree with some of the points they raised, if those points are actually true (namely that they felt, given forecasts at the time, these projects would have been viable – and that there were substantial barriers to private entry) I also disagreed with large amounts of it.

One of the main things I disagreed with was the call that increased “self-sufficiency” in terms of steel and fuel improved our “balance of payments”. Now this is a claim I’ve heard from a number of “Think Big” supporters – and as a result it is a claim I plan to discuss here.

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Matt Nolan

Posting trouble

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Hi all, For some reason I can’t post anything particularly long at the moment – as the site doesn’t like me.

As a result, none of the ideas I have for posts can be satisfactorily placed on the site. I can still comment though – its just taking a while.

If you want you can comment on this in the comments section of the post (ht Marginal Revolution, Econlog). I will try to get some posts up tonight.

Matt Nolan

No turning point in housing

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It is interesting to see the real estate blog calling a “turning point” in the housing market. For the sake of completeness, I’m going to attempt to call the opposite – namely I am going to put down the case for why the housing market will continue to remain slow.

Note that I am stating that it continues to remain slow – rather than making the even more specific argument that it will slow further. In order to defeat the idea that we have an upswing in the property market coming, I merely have to show there will be no upswing – after all it would be harder to record lower house sales volumes then we currently are 😉 . First, I will face up the facts that the real estate blog has put forward for an upswing, and then I will add a few more issues that I think will keep the real estate market depressed.

Also ultimately, the “heating up in the property market” appears to imply two things on the real estate blog, namely:

  1. Sales rising to normal levels,
  2. Steady house prices.

I will attempt to look at these issues separate – and I will discuss how these may trade-off.

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