Really good points, Matt, thanks. I’m sure that after the next three semesters of macro papers I’ll be able to improve on my analysis, I hope ; ) (and I hope Sam doesn’t see that I missed the lag!)

And there is good news in your graph: the gap between the US and us reverses on the RHS, surely indicating that our country is much more resilient these days. But it’s tempting to think that five years after the GFC more could be done to lift the rate back to 66%.

We had our most horrible post-Great Depression recession in the late-1980s and early-1990s – not in 2008-now.

I wouldn’t go as far as saying it was clearing the impact of government policy – after all “Ruthanasia” didn’t kick into action until 1991 … when the employment rate was at its lowest. And remember, employment rates lag the impact of any policy – if anything eyeballing the data would imply that this boosted employment rates.

Not that I actually think that to any great degree. Instead it illustrates that the drivers were other things. The real drivers were things like the failure of BNZ, the sharp decline in our terms of trade, the dual loss in wealth from a stockmarket crash and the collapse in the non-residential building market.

The fact the structure of the economy was being changed at the same time – with NZ moving from very protectionist to not – did make us vulnerable to a large external shock. However, rather than blaming policy directly, I would use it as a lesson that that are losers from policy change and their welfare is something we also need to consider – so you suddenly drop subsidies, perhaps it is a good idea to help reduce the costs associated with people upskilling and moving into other work!

What happened there?

I think I can see clearly the effects of Rogernomics, doubled down on by Ruthanasia just as we were staggering out of the gloom (that’s the uptick from about 89 – 90).

Your take?