Do we need to lower interest rates to battle COVID-19?

There is a lot of talk about a 50bp cut by the RBNZ in a couple of weeks due to COVID-19.  But what does this mean, and why are we cutting interest rates to battle a bad flu?  

In this post I am going to discuss the case for interest rate cuts during a natural disaster, to help to explain what demand shock they are battling and why this cut makes sense. The RBNZ already applied this logic during the Canterbury earthquake in 2011, so it is useful to think about COVID-19 from a similar perspective.

I’d like to thank the people I’ve chatted with about this issue to clarify what is going on – you know who you are, and I appreciate it.  The New Zealand economics community is wonderful!

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ECON130 Week 2: Consumer theory

Hello again everyone.

This week a different lecture is coming in to discuss economics with you – he’s great and you are all going to have a wonderful time.

I cannot link your lecturer’s slides here – but he is covering similar ground to other years. As a result, here is the Wednesday and Thursday slides from last year.

This week you have focused on trying to understand our friend the rational consumer, and how we can express the following:

  1. The opportunity set they have available to them.
  2. The choice they make given that opportunity set.
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Why is International Womens Day important?

Yesterday in New Zealand (and today, the 8th of March, around much of the world) it is International Womens Day.

I was brought up in the Soviet Union, and so this is a day that was always seen as very important – in fact it is a national holiday.

International Womens Day was established at a time when women were treated as second class citizens in society – either given legal status as a dependent, or potentially treated as property in marriage.

The original idea behind the day was that women and men should be treated equally by the law and by society, should be afforded the same opportunities as men, which constitutes things such as equal pay.

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The World Bank’s financial aid scandal

It is a pity that the World Bank’s Chief Economist Penny Goldberg has resigned after being in a role for only 15 months. Her resignation appears linked to the scandal around the financial aid leakage to private accounts in financial havens. 

The brief story is that when the World Bank provides financial aid to aid dependent countries, some of these funds appear to be transferred into the private accounts of the “elites” in the countries mostly known as “financial havens”. She then left because the research on this issue wouldn’t be published by the World Bank.

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ECON 130 (Intro Micro) Week One

Hi everyone – welcome to what will become a (regular) Wednesday post, even thought today is Tuesday.

To the students reading this, welcome to VUW’s ECON 130. The purpose of these weekly posts is to outline some of the key questions we should be able to think through given what we have worked through in class. You can also comment on these posts with questions from class if you want it to be seen publicly (including by your lecturer and other economists from around New Zealand).

The goal here is to think about what we are doing and why – if it is a suggestion about how to teach the content better then I’m all ears, but it is probably better just to email me 😉

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What does “decomposing income inequality” mean?

I was recently asked to explain the money-shot result from my PhD in a more accessible way – and I thought I’d share that here, just to get some feedback regarding whether the words I’m using actually make sense when they are put together:

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