Rodney Dickens says the new RBNZ Governor shouldn't trust his forecasts, should aim for OCR stability and discipline the politicians. Your view?

Rodney Dickens finds economists consistently over-estimated growth, housing consents and interest rates over the last year

Rodney Dickens proposes the RBNZ choose a neutral OCR and then stick to it to avoid marching up and down. Your view?

Rodney Dickens looks at how Don Brash and Alan Bollard ran monetary policy since 1989 and details their failures. Your view?

Rodney Dickens says the RBNZ is underestimating the impact of the tax changes on new home building

Rodney Dickens says 'smart growth' and migration made Auckland unaffordable

By Rodney Dickens I wrote the first "housing hell" report in August 2007. It looked at what was likely to happen to real or inflation-adjusted house prices after the mega-boom, using NZ and UK experiences. In that report I concluded that "to get the rental yield back to the historical average of 7.7%, the average rental income will have to increase 71% or the median house price will have to fall 42%. Or, more likely, some combination of the two will unfold." In the second "housing hell" report, written in March 2008, I looked in more detail at the extent to which house prices were out of line with incomes and rents. These reports offered valuable insights for anyone serious about understanding the underlying economics of the housing market, which has implications to the long-term performance of house and section prices. They were not designed to quantify near-term prospects for house prices, but these reports also provided advance warning of the imminent fall in house prices. House prices and, to a lesser extent, section prices subsequently fell and in time-honoured fashion the media was there to tell the horror stories. In a 6 January 2009 article on the front page of the business section of the Herald I was identified as picking that house prices would fall 42% in 2009 from the peak level in 2007. 42 might be the answer to the meaning of life, the universe and everything, but it wasn't my pick for house prices in 2009 (see here for my rebuttal).

By Rodney Dickens To keep in touch with what is happening at the coalface I monitor developments in a range of industries. The recent flow of news about NZ oil and gas exploration has caught my attention and I believe this is an issue that warrants monitoring because it could have a massive impact on many NZ businesses, including a significant negative impact on non-energy exporters. Having dismissed the recommendations of the 2025 Taskforce aimed at closing the gap between NZ and Australian incomes as being "too radical" the government needs to pull a rabbit out of the hat. The oil and gas industry appears to offer the government the only silver bullet available to both solve the major fiscal deficit problem and boost NZ economic growth. Recent announcements by Energy Minister Brownlee highlight the massive impact the oil and gas industry could have on the NZ economy and also signal the government's intention of chasing this opportunity.

By Rodney Dickens Since the international financial crisis started in 2007, and especially since it escalated post the bankruptcy of Lehman Brothers in September 2008, the overnight performance of the overseas markets has largely dictated what happens in the NZ share market and with the NZD/USD the next day. If the overseas markets have a good night it is almost a sure bet that the NZ share market will gain ground and the NZD/USD will appreciate, and vice versa if the overseas markets have a bad night. This linkage is reflected in the extremely high correlations between the NZX 50 share market index and the Dow Jones (left chart below) and between the world equity market and the NZD/USD (right chart below).