I think, if we are considering it in terms of monetary policy, the key question is whether a time of strong growth/elevated concerns about inflationary pressure is a time where households are likely to find it harder to borrow – when it is likely to be the opposite.

If there are other policy goals here, such as having automatic adjustments based on a growth rate such that it is seen as an “automatic” stabiliser then sure, Treasury can have a peak into that and think about it in a more general welfarist sense.

In terms of making the scheme “attractive” in some way – we are moving to a fiscal transfer, which is a separate argument again IMO.

What I am wondering is whether compulsion (which I abhor) is necessary and integral to the approach, or whether this variable saving rate could somehow be made so attractive to KiwiSaver members that a reasonable number of people would be willing to stay (or come) in on that basis anyway.

I guess it may just be a marketing thing – Labour is trying to show they will consider new things, and check them on their merit. That is sensible, and as far as marketing goes I am all for that.

I do fear that politicians “blame” the RBNZ for things, when actually they are the costs of policies that the politicians have put into place (Note: The policies would have had benefits also, but the politicians already claim them 😉 ).

I wouldn’t say it is easy to discuss trade-offs – it is certainly necessary though.

With regards to frameworks, I’m generally in favour of what we have – but would like to leave my mind open to be persuaded on elements of it, if things need to be changed. I’m an incrementalist at heart.

More broadly, I think that shifting things to technocrats needs to be done in a transparent and accountable manner – the accountability of the RBNZ is one issue where I might consider changing the current framework. However, this opens a whole can of worms – is there a trade-off between accountability and transparency, between accountability and the ability to commit wrt time inconsistency etc etc.

These are all good conversations for us to have, and I just want to avoid being too “dogmatic”, hence why my discussions on these things tend to be fairly open.

Social choice is hard what can I say – and I genuinely don’t think I can say as an economist that something is a problem or not. Instead, if people in society are complaining about something that has a representation in the data (the difficulty of exporting, combined with a situation where we have persistent CA deficits) it deserves investigation.

When we investigate, we can work out what the problem is, and what the policy solution is. These things are not transparent ex-ante. Now, these issues did get investigation with the three “working groups” – so perhaps that is the line of thinking we should be considering for policy.

And more fundamentally, this is a document on monetary policy, but monetary policy isn’t the cause of the high interest rates or historically high dollar. Monetary policy is responding to fundamentals, not creating them.

Note that the policy is simply to “ask the Reserve Bank and Treasury to assess in detail the new tool”. I can’t see it getting up. Surely it’s a matter for the Finance Minister.

sure, but there is no point/reason in asking why &/or and what we should we do unless you admit there is a problem in the first place.

So maybe I’ll ask a different way. Even given that the exchange rate is just a symptom, do you think NZ’s exchange rate is a symptom we should like, or not like?

Thanks for this Matt.

I share your concerns about shuffling big issues off to technocrats, but we’re doing that anyway, and there are some very obvious biases and inefficiencies in the current set-up as David Parker has outlined.

At this point I’m quite puzzled about whether you consider there is actually *any* problem with the current framework, even if you don’t fully agree with Parker’s characterisation. Its easy to discuss trade-offs, but much harder to decide whether you actually support the status quo or want to explore alternatives.

I prefer not to use terms like over/under valued – I prefer to ask “what is this asset/relative price suggesting and why”. Looking at policy problems solely through an intermediate, like the exchange rate, productivity, or inequality, muddies the water – it motivates investigation, but it doesn’t tell us what we “should” do.