Benje Patterson has decided to have a look at domestic air travel – with reference to the entry of Jetstar in June 2009 (Infometrics link here). Their entry, and the associated increase in competition in regional air routes, can be expected to have spillover benefits to the regional economies that are exposed to this:
Graeme Wheeler has written an op-ed on “Why Loan-to-Value Ratios were introduced“. Good, communication is an important part of what a central bank needs to do – especially when introducing new things!
I’ll leave the comments on this to someone else, I’ll just note:
Team NZ sadly didn’t win the America’s Cup. It would have been a good party in Auckland if we had. Just like the RWC was.
With more than a little hubris, there were numerous media stories on the economic benefits of winning and hosting the America’s cup. Now it appears it was too early.
In response to one estimate that the benefit would be $500m, I was quoted as colourfully describing that:
[The economic benefits of hosting the event would be based on] over-hyped studies that are proven to be absolute b…….. after the fact.
For the record, following is what I sent to each media query on the economic benefits of the America’s Cup. Read more
Today’s quote of the day stems from me starting to reread “Economic Analysis, Moral Philosophy, and Public Policy“. Last time I went through this book it annoyed me, as it didn’t seem to be attacking a “fair” version of an economist – rather a caricature.
However, I have noticed this time, in the first chapter, Hausman admits that is what they are doing – and it is to make the basic ethic principles they want to discuss “clear” to other economists. In other words this isn’t a book about criticising economists per se – more a basic description of some important moral principles to keep in mind when translating from theory to practice in economics and policy making, and decision making more generally. I can deal with this, and should be able to read the book far less defensively.
On that note he says:
Read more
I’m not commenting of course, but both LVR restrictions will limit lending to SME’s and on house building. As is stated by:
This was known before the LVR restrictions were put in place, hence why it is seen as an indirect tool. Mortgages are used as a cheaper finance option for small firms, this is one of the most widely known “secrets” around (sorry that article is only available to Infometrics clients it seems) – the regulations were put in place knowing that it would credit constrain these groups. Whether this is appropriate or not … well that would be commenting. If you want to in comments go for it 😉
Note: The link isn’t available, sorry – I thought our articles from March 2013 were freely available now, but seems not! The article is on LVR’s and risk-weighting adjustment (before it was clear which tool the Bank was going to use), but in the LVR section the quote I wanted is:
Furthermore, it is important to ask who will be getting credit constrained by the introduction of LVRs. Who are the sorts of people that load up on mortgage debt?
It is our view that the credit constraints will be most binding for the following groups.
- Young borrowers who haven’t built up sufficient equity
- Small business holders who rely on mortgages to fund investment in their business
- The construction industry, by making it more difficult for people to use their property as equity when looking at infill or the construction of a new house
As a result, the introduction of a maximum loan-to-value ratio will lead to collateral damage for small firms and some private investment in the residential building industry.
Via Noah Smith I’ve seen this interesting article on the food industry – it is a long read, but worth it!
But why couldn’t Big Food’s processing and marketing genius be put to use on genuinely healthier foods, like grilled fish? Putting aside the standard objection that the industry has no interest in doing so—we’ll see later that in fact the industry has plenty of motivation for taking on this challenge—wouldn’t that present a more plausible answer to America’s junk-food problem than ordering up 50,000 new farmers’ markets featuring locally grown organic squash blossoms?
It is an issue I see a lot of my friends talking about, and one which has led Gareth Morgan and Geoff Simmons to write a book. Seems like an interesting and important issue to think about 🙂
Note: I have no interest in trying to define what people should be doing here – and I aim to have a little chat about choice at some point in the future as I think it is an important issue that can get lost in this (eg I feel it gets lost here). However, I can tell the food issue is, and is going to be, an issue that people want to look into – and would like to hear your thoughts 😉