This article on stuff seems to throw down a great set of principles to keep in mind when talking about the New Zealand economy with New Zealand macroeconomists – in a way that intelligent people not versed in economic prose can understand.
- Commodities are our comparative advantage, they are what NZ is relatively better at making than other things.
- Monetary policy that targets inflation aims to set NZ in a “Goldilocks zone” where the economy isn’t running too hot (high inflation) or too cold (high unemployment).
- Don’t put too much faith on one data point, or even one data set. To tell a story we need to explain why a full set of different figures are moving the way they are.
- As a small open economy, what is going on in the rest of the world is important!
- Economics isn’t about telling the future. Economic forecasts are useful only insofar as they tell us about risks and describe what is going on – economists cannot tell the future.
All good points. I think that number 4 (we are a small fish in a big pond) is the most important one to keep in mind for any of these conversations you may have, while number 2 (the Goldilocks zone) is the best, and easiest to understand, of the stated stories.
Good story, well done Stuff and the economists involved.