So when a disaster hits, the government is willing to bail out domestic insurance companies to “provide certainty for claimants”. Ok. As a result, insurance firms will discount these large scale low probability events – and take on more risk when providing loans. Their willingness to take on more risk than is socially optimal will […]
This is a point we all need to remember. Even when the benefits outweigh the costs, the tabulation of gains and losses by groups highlights the facts that international trade has distributional consequences. That realization should not induce policymakers to hinder trade via protectionist measures. Rather it reminds us that transfers from gainers to losers […]
Kiwiblog states that he disagrees with the Herald on a tax levy being introduced now. I think his points on it slowing the economic recovery are valid – increasing taxes to pay for investment when the government can borrow the money at a lower rate of interest AND many consumers are actually locked out of […]
Via Bernard Hickey’s Twitter feed I saw the following from the IMF: But this globalisation had a dark side — a large and growing chasm between rich and poor. While trade globalisation is associated with lower inequality, financial globalisation — the big story of recent years — increased it. Even ignoring other important policy elements, […]
So some businesses are complaining that the spot price of electricity occasionally spikes when there is a shortage (and that these spikes are inconsistent). They want government intervention. My question is, if these spikes are such a concern – why don’t the businesses set up fixed price contracts with electricity retailers in the same way […]
Following a major crisis, such as the one we’ve just experienced, it is easy to get into a situation where the goal of policy is to “avoid another crisis”. However, this is not a trap that our fine readers fall into – so we don’t need to worry about it here 😉 . This isn’t […]