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With the mass of recent discussion on the exchange rate and the “structure” of the economy (here, here, here, and here) it seems like a good time to discuss exactly how the exchange rate matters insofar as discussing the economy. Luckily for us, Paul Krugman has already done an excellent job of this.
So the Reserve Bank left the cash rate unchanged at 2.5%. Three quick points: Their forecasts are stronger than in June, They talked alot about structural imbalances (something I heard about a couple of months ago), They actually framed their decision in terms of inflation again, like the Aussies have been. “Annual CPI inflation is […]
Whale Oil is unhappy with Bill English mentioning a capital gains tax. Specifically he says: In times of recession it isn’t that the government should be looking for more taxes. But there are two reasons why I think Bill English is correct at the moment. Bill English appears to be saying that he wants income […]
An Infometrics report for QBE has stated that house prices are expected to be 24% higher in three years time. As the Rates Blog says this implies that “inflation-adjusted house prices were currently 15% above their long-term trend-line but could get toward 30% above the trend by June 2012”. The people commenting on the blog […]
As mentioned here earlier, the high NZ dollar is a symptom of domestic imbalances not a cause – so instead of looking at intervening in the dollar we should be trying to understand exactly what is driving structural issues in the economy. A couple of articles that follow on in this view are: Brian Gaynor […]
So on the 14th of July Alan Bollard said the follow in a speech to the Hawke’s Bay Chamber of Commerce: Sustainable recovery, with rebalancing in demand and the economy’s productive base, is mostly a microeconomic matter. This means households, firms, banks and investors making the right decisions about where to allocate land, labour, capital […]