Matt Nolan

IMF on redistribution and growth

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Last month I noticed a piece from the IMF “redistribution, inequality, and growth”.  It came out after my post on “Okun’s leaky bucket” and I was pretty happy to see the piece – as it was actual empirical research stating that the policy trade-offs are more complicated than some grand “equality vs efficiency” policy choice.  As they say in their introduction:

It must be borne in mind that the data are particularly scarce and unreliable for redistribution, even more so than for inequality.  Indeed, one possible interpretation of our results is that the data on redistribution simply do not contain enough information to infer a negative (or for that matter a positive) direct effect.

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We should of course be cautious about drawing definitive policy implications from cross-country regression analysis.  We know that different sorts of policies are likely to have different effects in different countries at different times.

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What we find is that we should not assume that there is a big trade-off between redistribution and growth

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Infometrics

Does the “Best Start” policy make sense?

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According to a recent Colmar Brunton poll child poverty and education (which is another policy around the opportunities of the child) are major issues of interest to the public.  Recognition of this had led Labour to announce their Best Start policy a few weeks ago.  But does the policy make much sense?  Gareth Kiernan has his reservations (Infometrics link):

Best Start is a typical case of a policy solution being developed to an inadequately defined problem, mixed up with a dose of admirable sentiments and a sizable helping of realpolitik.  We don’t have a robust definition of poverty, and for children who are not being adequately provided for, it is difficult to arrive at a fair apportionment of responsibility between the family and society.

What are your thoughts?

 

 

Matt Nolan

Mismeasurement and income inequality

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Update:  Anyone that is waiting for this, I’m sorry but I am massively swamped with work.  I will do this – I need to look at this for other work of my own – however, a post may not appear until mid-March.

Just as a pointer, I see that there were some measurement errors in the income data used by Treasury, Stats NZ, and MSD.  That implies that some of the work mentioned at the start of this post (the recent stuff, not the longer term research papers) will be off. (ht Rates Blog).  MSD goes through matters here, I will read through what they said on the weekend.

Given how much discussion there is about these issues at the moment, this is a touchy subject – understandably.  A couple of points I’ll make are that:

  1. Given how careful these departments are, this will be upsetting for them.  I respect the fact they’ve owned up and not made any excuses.  Maybe it is my recent dealings with Vodafone, where they just kept blaming other people for the fact I have to repeatedly cancel an order I made six weeks ago, but it is nice to see organisations owning up and not making any excuses.
  2. It is important we all try to figure out what these error mean for our understanding of the issues, and policy trade-offs.

I will try to have a post up discussing what is going on next week – and what it means for some of the things I have discussed on the blog over the past year.

Matt Nolan

Bleg: Nearing time to restart contributions to the “Cullen Fund”?

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I’m current reading a paper discussing the different ways of measuring Gini mean difference (a statistical measure which you in turn use to get the Gini coefficient) and writing summary articles on HES expenditure, NIIP (including post-2009 revisions) in NZ and Aussie, and expenditure GDP factor shares for clients.  As a result, I’m not brimming with insightful commentary, although I am having fun.

However, there is a question I’d love to hear your views on.  Should we be restarting contributions to the “Cullen Fund” pretty soon?  Here are some reasons that may support it:

  1. We are nearing surplus/concerns about the government fiscal position are less significant.
  2. We are experiencing a high high terms of trade.  In some ways, the boost in prices for dairy products could be seen as a natural resource “boom”.  In that case, could the Cullen Fund be seen as an appropriate sovereign wealth fund?
  3. The Cullen Fund was put in place because of concerns about the affordability of universal superannuation, these concerns still exist and if we are completely unwilling to increase the retirement age …

I do not have a comprehensively thought out view on this, I haven’t look at relevant data and fiscal accounts are my area of interest.  Hence why I thought I’d ask some of you fine people who have no doubt put more consideration into these issues ;)