03 Aug 2015
by Jim Rose
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), great depression, great recession, history of economic thought, law and economics, macroeconomics, monetary economics
Tags: bank panics, bank runs, banking crises, currency crises, Thomas Sargent
02 Aug 2015
by Jim Rose
in budget deficits, business cycles, economic growth, fiscal policy, global financial crisis (GFC), great recession, history of economic thought, macroeconomics, monetarism, monetary economics
Tags: Brad Delong, fiscal multiplier, fiscal stimulus, Larry Summers, New Keynesian macroeconomics, Thomas Sargent
31 Jul 2015
by Jim Rose
in currency unions, economic growth, Euro crisis, international economics, macroeconomics
Tags: British economy, customs unions, EU, EU membership, free trade areas, international economic integration, preferential trading agreements, regional integration
30 Jul 2015
by Jim Rose
in business cycles, currency unions, economic growth, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, unemployment
Tags: employment law, employment regulation, EU, Euro sclerosis, Euroland, Eurosclerosis, Japan, labour market regulation
25 Jul 2015
by Jim Rose
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), international economics, law and economics, macroeconomics, monetary economics, property rights
Tags: capital controls, capital flight, Greece, labour exodus, sovereign defaults
24 Jul 2015
by Jim Rose
in business cycles, econometerics, economic growth, economic history, job search and matching, labour economics, labour supply, macroeconomics, politics - New Zealand, Public Choice, unemployment, unions, welfare reform
Tags: antimarket bias, Don Brash, economic reform, expressive voting, Homer Simpson, Leftover Left, lost decades, makework bias, neoliberalism, rational ignorance, rational irrationality, Sir Roger Douglas, Twitter left
Today, Closing The Gap – The Income Inequality Project boldly claimed today that there was next to no unemployment in New Zealand prior to the onset of the curse of neoliberalism.
There is an Internet on computers now where it is easy to find data showing that the unemployment rate was rising rapidly in New Zealand in the 1970s and in double digits by the end of the 1980s – see figure 1.
Figure 1: harmonised unemployment rates, Australia and New Zealand, 1956-2014
Source: OECD StatExtract.
Figure 1 shows unemployment was rising rapidly in the 1970s and wasn’t much different by the end of the 1970s to the unemployment rates recorded after about 2000 in New Zealand.
One of the reasons that Sir Roger Douglas wrote There’s Got To Be A Better Way was the rapidly rising unemployment in New Zealand and the stagnant economic growth in the late 1970s and early 1980s.
New Zealand was one of the most regulated economies, so much so that Prime Minister David Lange said:
We ended up being run very similarly to a Polish shipyard.
As for those jobs on the railways, the then Reserve Bank Governor Don Brash said in 1996:
Railways cut its freight rates by 50 percent in real terms between 1983 and 1990, reduced its staff by 60 percent, and made an operating profit in 1989/90, the first for six years.
19 Jul 2015
by Jim Rose
in business cycles, economic growth, economic history, fiscal policy, job search and matching, labour economics, macroeconomics, unemployment
Tags: Celtic Tiger, equilibrium unemployment rate, Eurosclerosis, Germany, Ireland, Italy, natural unemployment rate, Rance, Spain
Figure 1 shows large contrasts in time path of equilibrium unemployment rates. For example, French and Italian equilibrium unemployment rates haven’t changed much since about 1986.
Figure 1: equilibrium unemployment rates, France, Germany, Italy, Ireland and Spain, 1968 – 2016
Source: OECD Economic Outlook June 2015 via OECD StatExtract..
Figure 1 also shows some fortuitous ups and downs in the German equilibrium unemployment rate. This estimate was available only from after German unification.
The equilibrium German unemployment rate rose from 6% to above 8% on the eve of the global financial crisis. Fortunately for Germany, major labour market reforms brought the equilibrium unemployment rate down as Germany moved into the global financial crisis.
The Spanish equilibrium unemployment rate had been terrible since about 1980, started to fall in the 1990s, then skyrocketed even before the onset of the global financial crisis – see figure 1.
There have been ups and downs in the Irish equilibrium unemployment rate – see figure 1. It was as high as 14% at the end of the Irish great depression of the 1970s and 1980s. The equilibrium Irish unemployment rate was 8% at the heyday of the Celtic tiger then slowly rose in the lead up to the global financial crisis.
17 Jul 2015
by Jim Rose
in applied welfare economics, budget deficits, comparative institutional analysis, constitutional political economy, currency unions, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy, income redistribution, macroeconomics, Marxist economics, Public Choice, rentseeking
Tags: Greece, growth of government, Margaret Thatcher, size of government
17 Jul 2015
by Jim Rose
in economic growth, economic history, human capital, income redistribution, labour economics, labour supply, politics - New Zealand, poverty and inequality, Public Choice, rentseeking
Tags: Leftover Left, neoliberalism, top 1%
On 12 August last, Closer Together New Zealand posted a chart showing average hourly wages had been stagnant for 20 years and then started growing again in 1993. Closer Together New Zealand then rounded up the usual suspects of the Left over Left.
Later that month in a comment on that post, a chart was posted showing that inequality had been increasing quite rapidly in the late 1980s and early 1990s in New Zealand. There were a range of economic reforms Closer Together New Zealand didn’t like in the late 1980s and early 1990s.
Closer Together New Zealand did not notice their second chart showed there had been a large increase in inequality, and their first chart showed that this was followed by the return of regular average hourly wages after 20 years of stagnation.
I am not so vulgar as to suggest correlation is causation, but it is amusing to watch that one day a chart is posted showing a resumption of wages growth after 20 years of wage stagnation and the next day a chart is posted showing that the major economic developments in the preceding years were a large increase in inequality and substantial economic liberalisation.
To add to my amusement, a companion site Inequality A New Zealand Conversation posted a chart showing the top 1% had not had much at all in income growth for the last 20 years while most everyone else had. This spike in the incomes of the top 1% prior to about 1994 was followed by the resumption in average wages growth after 1994.
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