Does monetary policy need to respond to the surge in inflation during pandemic?
Inflation went up to 2.5% in the March quarter, its highest rate since 2011. This was a fair amount above expectations, with the RBNZ expecting a 2.2% rate. They were not alone with private sector forecasters also expecting weaker inflation outcomes.
This raised two questions from me:
- Is this evidence that COVID was a supply shock more than a demand shock?
- And does it mean that monetary policy should respond?
I want to think about the later point in this post – as the first question will get answered as we work through it.
Read moreECON130 Week 4: Producer Theory
Hi everyone.
My apologies that we can’t meet in person anymore – as the university is now running classes online due to the COVID-19 quarantine. You will have seen that the lectures are already online – feel free to watch them when you can. Lecture 7 slides are here and Lecture 8 slides are here.
This week we are switching from thinking about consumers to thinking about producers. Instead of asking why someone may purchase a product, or select a set of products from an available set, we are asking about the incentive to sell those products.
As is the case with consumer theory we leave prices fixed for now so we can focus on where the scarcity is and what incentives the producer has.
This week we focused solely on costs – lets talk a bit more about those. Specifically I want to summarise some of the ideas we covered in a different way (starting at the end of the 8th lecture rather than the start of the 7th) to hopefully help tie everything together.
Read moreHave supermarket prices shot up? Evidence from the Stats NZ data
I have been hearing anecdotes from my friends in Europe that prices in supermarkets have increased since the last couple of months. Interested I had a look online and found a number of articles outlining this around the world.
According to the media, NZ shoppers have faced this as well.
“Some customers have taken to social media to complain that prices of items like soap, meat and fresh veggies have increased sharply.”
However, supermarkets kept denying the fact. It’s hard to judge the case from my experience, as Matt and I were lazy and were primarily eating outside before the lockdown. However, Stats NZ provides data here – so let’s look at the latest release on the Food price index to figure out whether the customers are right.
Read moreThe economic consequences of the pandemic of 2120
Greetings reader from 2120, I see that you are trying to work out what the economic consequences of the unfolding pandemic in your time will be – and so are looking up information on the COVID-19 pandemic from 2020. I am a random person from 100 years earlier, and I am here to guide you on this journey.
Gulnara has done a great job of highlighting the broad way to view this pandemic and understand how such a shock works through the economy – but I think it is important that I give you some cautious advice about applying the 2020 lessons to your time.
Ultimately you can’t just take the economic consequences of a past pandemic (even if this virus itself looks similar) and state that this will be the consequence of it now – a lesson we have learned when looking at the Flu of 1918-20 in our time. However, I want to talk through some key issues to help you think about it.
Read moreHow many New Zealand jobs can be done from home?
The pandemic confined the vast majority of us to work from home during the quarantine period. However, there are certain types of occupations such as masseuse and hairdresser that can not be performed from home. Inspired by the recent NBER paper on how many jobs can be done at home,
I have calculated rough estimates for New Zealand regarding the labour markets capacity to work from home. Applying the same industry correspondence to New Zealand (based on LEED data) and using the US weights (so assuming the same ability to work from home by industry) I have calculated that 31%-36% of jobs can be done from home.
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