Grant Scobie

Household Bargaining Over Wealth And The Adequacy Of Women'S Retirement Incomes In New Zealand

Abstract Bargaining models of household wealth accumulation point to a potential conflict of interest between husbands and wives. Wives are typically younger than their husbands and have longer life expectancy, so they must expect to finance a longer retirement period. Therefore, when they have greater relative bargaining power, households will accumulate more wealth. There is some weak evidence for this in the United States, but this article finds the opposite pattern in New Zealand, where womens greater bargaining power results in a lower net worth in the pre-retirement cohort of couples. In New Zealand, where public pensions are more generous than in the US and are not affected by holdings of private wealth or income, it may not be rational for women with greater relative bargaining power than their spouses to favor wealth accumulation. These results indicate the importance of the policy context when considering household bargaining models.

Using Engel curves to estimate CPI bias in a small, open, inflation-targeting economy

The Consumer Price Index (CPI) bias for New Zealand is calculated by estimating the food Engel curves for demographically similar households with the same level of CPI-deflated incomes at different points in time. For the 17 years from 1984 to 2001 the bias in the New Zealand CPI as a cost-of-living index averaged over 1% annually. This bias is similar to estimates for the US when the same method is used over a similar era. Thus, the claim of some statistical agencies that bias in their own CPI is less than the widely discussed bias in the US may not be supported. The estimated CPI bias justifies the initial choice of inflation target for the Reserve Bank of New Zealand but not the recent raising of the target.

Population Ageing In New Zealand: Implications for Living Standards and the Optimal Rate of Saving

Over the next 50 years, New Zealands population will age substantially. There has been wide debate about whether New Zealand should prepare for population ageing by increasing national savings. This question is addressed by choosing time paths for consumption, savings and debt, through the use of a Ramsey‐Solow model of optimal saving, adapted for investigating problems of population ageing. The simulation results suggest that population ageing alone would not justify increases in national savings rates beyond those envisaged by current policy. The cost of ageing in terms of reduced real consumption is not large enough to justify large additional savings, and the concomitant reduction in current consumption.

Agricultural research: Implications for productivity in New Zealand and Australia

R&D is as an important source of productivity growth in New Zealand and Australian agriculture. In this paper trends in public investment in R&D and in productivity growth are reviewed. Investment in R&D has been flat in both countries until an upturn in recent years in New Zealand. Nevertheless research intensity in Australia appears to have been higher than that in New Zealand. Productivity growth is also likely to have been higher. We review recent analyses and tentatively conclude that returns to investments in domestic research in both countries are likely to have been in the order of 15 ‐ 20%.

Pensions, Savings and Housing: A Life-cycle Framework with Policy Simulations

The objective of the paper is to explore the saving and consumption responses of a representative household to a range of policy interventions such as changes in taxes and pension settings. To achieve this, it develops a two-period life-cycle model. The representative household maximises lifetime utility through its choice of optimal levels of consumption, housing and saving. A key feature of the approach is modelling the consumption of housing services as a separate good in retirement along with the implications for saving. Importantly, the model incorporates a government budget constraint involving a pay-as-you-go universal pension. In addition, the model allows for a compulsory private retirement savings scheme. Particular attention in the simulations is given to the potential impact on household saving rates of a range of policy changes. Typically the effect on saving rates is modest. In most instances, it would take very substantial changes in existing policy settings to induce significant increases in household saving rates.

Debt projections and fiscal sustainability with feedback effects

Abstract This paper analyses long-term fiscal sustainability with a model which incorporates a number of feedback effects. When fiscal policy responds to ensure long-term sustainability, these feedback effects can potentially modify the intended outcomes by either enhancing or dampening the results of the policy interventions. The feedbacks include the effect on labour supply in response to changes in tax rates, changes in the country risk premium in response to higher public debt ratios, and endogenous changes in the rate of productivity growth and savings that respond to interest rates. A model of government revenue, expenditure and public debt which incorporates these feedbacks is used to simulate the outcome of a range of fiscal policy responses. In addition, the effects of population ageing and productivity growth are explored.

How Uncertain Are Long‐Run Fiscal Projections? Non‐Parametric Stochastic Modelling for New Zealand

type=main xml:lang=en> This article introduces uncertainty into a fiscal projection model which incorporates population ageing along with a number of feedback effects. A new non-parametric method of producing stochastic projections is explored. This allows for the complex nature of the observed joint distributions of relevant variables and their time paths. Stochastic projections of a range of policy responses are produced, allowing for uncertainty regarding the world interest rate, productivity growth and the growth rates of two components of per capita government expenditure. The probability of exceeding a given debt ratio in each projection year, using a particular tax or expenditure policy, can then be evaluated. Examples of tax policies designed to achieve a target debt ratio are examined. Policy implications are briefly discussed.

KiwiSaver and the Accumulation of Net Wealth

ABSTRACT The objective of this paper is to analyse the extent to which membership of KiwiSaver has been associated with greater accumulations of net wealth. The paper utilises two linked sources of data which cover the period 2002–2010: Statistics New Zealands Survey of Family, Income and Employment and Inland Revenue Department administrative data on KiwiSaver membership. Two approaches are employed: difference-in-differences (where the outcomes of interest are changes in net wealth) and various panel regression techniques. Results appear consistent with earlier evaluations of KiwiSaver. Neither approach suggests KiwiSaver membership has been associated with any positive effect on net wealth accumulation.

KiwiSaver: an evaluation of a new retirement savings scheme

ABSTRACT This paper provides an evaluation of the performance of KiwiSaver, a subsidised voluntary savings scheme aimed at increasing the retirement wealth of a target population. Four key dimensions of performance are assessed using a variety of empirical techniques drawing on data from a national survey of 825 people conducted in 2010. Results suggest that only one-third of contributions to KiwiSaver represent additional savings. Regression analysis finds no relationship between KiwiSaver membership and expected retirement income outcomes. Examination of standard measures of programme efficacy such as target effectiveness and leakage suggests that KiwiSaver has been only modestly successful in reaching the target population and that leakage to the non-target population was high, at 93%. Finally, the schemes possible effect on national saving was examined. In the long run, the effect on net national saving appears marginal at best.

Quality Adjusting Education Sector Productivity

This article examines how quality-adjusted productivity indices for the education sector may be constructed and proposes methods for making such adjustments to basic measures of labour and multifactor productivity growth. Results highlight the need for careful measurement, showing that measures unadjusted for quality are unlikely to provide sufficiently robust signals about changes in productivity performance in the education sector on which policy advice could be built. Our evidence suggests that quality adjustment to both inputs and outputs can make substantial differences to conclusions about productivity growth trends over 2000–15 compared with unadjusted indices.