How many New Zealand jobs can be done from home?

The pandemic confined the vast majority of us to work from home during the quarantine period. However, there are certain types of occupations such as masseuse and hairdresser that can not be performed from home. Inspired by the recent NBER paper on how many jobs can be done at home,

I have calculated rough estimates for New Zealand regarding the labour markets capacity to work from home.  Applying the same industry correspondence to New Zealand (based on LEED data) and using the US weights (so assuming the same ability to work from home by industry) I have calculated that 31%-36% of jobs can be done from home.

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How is monetary policy useful given the COVID-19 shock?

In my last post I noted that the “supply or demand shock” framing for COVID-19 could be useful, but hid important elements – namely even when there is a real shock if we aren’t noticing rising factor prices (eg wages) there is a demand element.

Given current concerns most focus is on the question of how to deal with the consequences of a disaster now – in a way that doesn’t lower productive capacity in the future.  This is a good frame, and the New Zealand discussion has been strong relative to a lot of other countries.

However, even though a lot of the stores are closed now “demand” management is not just about that future – it needs to occur now as well.  As a result, monetary policy does have a role.

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Is COVID-19 just a supply shock?

In this post I want to have a bit of a brainstorm around the real shock we are facing with COVID-19 in the country. The key idea I wanted to think about was what type of shock this is – a supply shock, demand shock, or both!

Note that this is a public health crisis – and I recognise that these issues take precedence. But it is still important to think through the economic consequences, at least to understand what they are.

Three compelling tweets make the case for why the focus should be on supply, demand, or on some combination of both:

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Hard and fast on Corona – Morocco style

For the last 8 months I have been teaching at a small liberal arts college in Morocco, Al Akhawayn University.  It is located 1600m high in a small town in the Atlas Mountains, about 60 km from Fez. 

Morocco went into full lockdown on Friday March 20 at 6pm, just after the 80th case was reported. Its reported trajectory has been very similar to that as New Zealand but, after a slow start, the response has been dramatically faster. At the moment there is a ban on all movement in public spaces, schools and universities are closed and education is on-line, non-essential work places are closed, and people have been issued certificates restricting their movement to two shopping trips per week. Borders have been closed for more than a week  – this is for all people, residents and non-residents, in and out. The ban is indefinite, presumably until the government is convinced the threat is controlled. 

I am writing this as the response is clearly different to that in New Zealand, even though both countries are reporting a similar infection experience. You may be interested to know what a preventive lockdown looks like.

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Central banks and large scale asset purchases 

With COVID-19 causing concerns, the RBNZ announced to cut the official cash rate to 0.25% on 16 March.  Given this the OCR is at a low level now- leading to open consideration of other potential “unconventional tools” such as Large Scale Asset Purchases (LSAP) or more commonly termed as Quantitative Easing.  With this now taking place around the world I wanted to discuss these tools.

Upfront I want to note that monetary policy doesn’t do anything to prevent a pandemic – so the main purpose of most of these tools in the short term is to ensure liquidity and avoid the insolvency of firms and financial institutions that would be solvent in the long-term.

But coming out of the pandemic the ability to “boost demand” will be important in the future- so having an idea about how the tools can fill that aim when the time comes is useful.

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Pandemics and scarcity – thinking about grocery prices, overall demand, and understanding policy

With the pandemic news moving quickly Matty convinced me to spend more time on Twitter to keep up with the news (my account is here if you want to follow). I saw some interesting links regarding the economics of COVID-19 which I would like to share and comment on – and I decided to run through all these points on one post .

Here are the topics I cover. Each is titled, so you can scroll down if you are only interested in one these:

  • A jump in the CPI even as demand falls? Consumer prices may rise in the short term, even as expenditure is falling – and this “price level” change is not necessarily indicative of a supply shock.
  • How to visualize the “timeline” of COVID-19 and the economic elements.
  • What does ECON101 think?
  • On humility: During the health crisis public health experts are the primary people able to analyse the issue and help with policy. Economists main role remains defining the trade-offs, but not deciding policy.

I don’t want to state what policies I think are good and which are bad. Instead I just want to share these points, as they are ideas I am using to understand what different policies might be trying to achieve as an interested person.

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