A quantity surcharge occurs when a larger package costs more per unit than a smaller one. Although counterintuitive, such surcharges are common in supermarket pricing. Using manually collected price data from 1,491 product-type-store observations across 38 New Zealand supermarkets, we document their prevalence and distribution. Quantity surcharges affect roughly one in four products, a rate comparable to international evidence. Contrary to our initial expectation, they appear less prevalent in rich neighbourhoods. They also vary sharply across product categories.
Immigration into New Zealand has recently been at an all-time high, while relative to incomes the country's housing market is one of the least affordable in the OECD. Using public release census data from 1991 to 2018, we estimate immigration's impact on rental costs at Area Unit level relative to domestic population growth or migration. We instrument for immigration using previous settlement. In our most credible specification, a percentage point increase in immigrant share raised local rents by a modest 0.91 percent relative to domestic population increase. Results persist using the broader Ward level, clustering standard errors, using sparse controls or spatial lags, but not when dropping the 2018 census. We find the effect is significant for Wellington but not for other major centres, nor for low-income or -education receiving areas. Effects are strongest for immigrants originating in Europe or Asia, and those having lived in New Zealand ten or more years.
This paper examines the fairness case for taxing real capital gains tax in New Zealand. A capital gains tax doubles taxes real capital gains arising from permanently retaining some of the asset's earnings. Also, real capital gains not due to retention of earnings lower the business's overall tax rate in the absence of a capital gains tax, but the current owners of the assets do not benefit from this because the prices they paid for the assets would have reflected the tax regime. Furthermore, some of the burden of a capital gains tax would fall on current owners of the assets through a reduction in the value of their assets, but none of the burden would fall upon future owners despite them paying the tax because the prices they would pay for the assets would reflect the new tax regime. Accordingly, capital gains tax does not satisfy the fairness test.
This paper studies valuation under usage-timing uncertainty for random-time-use goods, defined as goods for which usage opportunities arrive at stochastic times. We model usage opportunities as a nonhomogeneous Poisson process and derive closed-form expressions for the expected present value of utility under constant, exponential, power-law, and oscillatory arrival rates. For oscillatory usage patterns, we show that the interaction between cycle frequency and discounting yields a phase-dependent ranking of feasible start dates, a phase-alignment premium, and a measure of the dollar-valued gain from switching between feasible start dates. An empirical application to backup-generator valuation demonstrates how observed power-interruption patterns translate into present-value upper bounds on the ownership costs a rational household should be willing to bear. The framework isolates demand-side usage-timing uncertainty, a dimension complementary to the supply-side deterioration and replacement problems emphasised in durable-goods models, and provides tools for acquisition, rental, and stockpiling decisions across household, business, and policy contexts.
While the debate over upzoning focuses on increasing housing supply, the role of physical parcel complexity in redevelopment remains largely unexamined. We assemble a citywide, parcel-level dataset for Auckland, New Zealand, linking land values to shape characteristics, zoning capacity, and rich network-based amenities. Using an OLS hedonic pricing framework supported by tree-based machine learning techniques (Random Forest, XGBoost) to capture complex non-linearities, we highlight a critical economic relationship: the capitalisation of more permissive zoning into land values is significantly stronger on geometrically simpler parcels. The machine learning approaches validate and extend our baseline estimates, demonstrating that this key interaction holds even when allowing for highly flexible functional forms. The policy implication is practical: evaluations of upzoning must explicitly control for shape complexity. Failing to do so risks entangling the economic value of zoning capacity with the physical constraints of land parcels, potentially overstating the efficacy of upzoning on complex lots.
According to the United Nations' World Population Prospects 2024, global population is projected to peak at about 10.3 billion in the mid-2080s. However, rapidly declining fertility suggests an earlier peak, possibly one billion lower. Natural decrease is becoming widespread in high - and middle-income countries, driven by sustained sub-replacement fertility and population ageing. Economic consequences include slower productivity growth, labour market adjustments, shifting consumption, fiscal pressures, and intergenerational tensions. Pro-natalist policies show limited impact, while migration offers only partial and politically constrained relief. Technological adaptation - especially automation, robotics, and artificial intelligence - is likely to expand beyond early adopters such as East Asia. Urbanisation remains dominant, though post-COVID counter-urbanisation and digital nomadism generate localised change. Aotearoa New Zealand illustrates these dynamics, shaped by its distinctive geography, population mobility, and high ethnic diversity. Economic perspectives highlight the risks and costs for policy and planning of ignoring predictable demographic change.
Is US monetary policy uncertainty (US MPU) associated with waves of capital flows? Global risk and economic policy uncertainty are associated with capital flows, but less is known about how the US MPU drives capital movements. We investigate the effects of the US MPU on the waves of capital flows in 48 economies (more and less financially open) over the period 1986q2-2018q4. We find that an increase in the US MPU decreases the likelihood of flight and increases the probability of retrenchment. However, countries with capital controls and floating exchange rate systems are successful in mitigating the waves of capital flows. Our findings suggest the US MPU is an important driver of capital flows as per the real options channel. An important implication is that capital controls may be more effective than floating exchange rate systems in managing capital flows amid US monetary policy uncertainty.
Recent work in New Zealand predicts that students who receive an extra year of primary school instruction are 41 percent more likely to achieve NCEA Level 3. However, a simple comparison of achievement across students with the greatest average difference in instruction time shows no perceptible differences in outcomes. We explain this apparent paradox by demonstrating that improper sample creation in existing research has generated a spurious relationship. In particular, prior research included students from cohorts which were still progressing through secondary schooling. The consequence of this is that large temporary gaps in achievement are interpreted as long-run differences in outcomes. Correcting the sample yields results which indicate no significant impact of instruction time on secondary outcomes.
This paper examines the effect of trade credit on small and medium enterprises (SMEs) on-the-job training in Vietnam. The empirical findings show that there exists a positive and significant effect of trade credit on SMEs' on-the-job training, both in terms of training incidence and duration. However, this effect is more significant with respect to the training of newly recruited workers, not existing workers. These results are robust to various firm-level control characteristics, unobserved heterogeneity and endogeneity. The paper contributes to the finance-training nexus and human capital accumulation at the firm level.
With business studies now an option alongside traditional economics and accounting at NCEA (National Certificate of Educational Achievement) level three in New Zealand secondary schools, many students interested in business may not have taken economics before university. This study examines whether prior completion of level three NCEA economics standards is associated with greater academic success in an introductory microeconomics course at the University of Canterbury. We find that students who completed at least one level 3 economics standard score, on average, about 12 percentage points higher in the course and are about 12 percentage points less likely to fail compared to those without this background. However, after controlling for student fixed effects, the advantage shrinks considerably: students perform only about 2.5 percentage points better on university assessments that closely align with the NCEA standards they studied, and this effect is only marginally significant at the 10% level. These results suggest that the true causal impact of passing economics in high school on subsequent university performance, if anything, is likely to be small.
Core inflation is commonly understood as the component of headline inflation that is expected to persist over the medium term. This paper evaluates the recent performance of limited influence estimators of CPI inflation in New Zealand over the 2000 to 2024 period. We show that an asymmetric trimmed mean that removes 20% of the upper tail of the distribution, and 17% from the lower tail, minimizes squared errors when a conventional centered thirteen-quarter smoothed measure of headline inflation is used as an ex-post proxy for core inflation. These weights are close to the 20% trimmed mean published by Statistics NZ, suggesting that this measure currently offers the most reliable official measure of core inflation in the New Zealand context.
We build a small open economy overlapping-generations model (SOE-OLG) to understand changes in the natural rate of interest in New Zealand over the period 2000-2024. We consider six drivers of the natural rate of interest: the world natural rate of interest, population growth, productivity growth, government debt levels, old-age labour force participation and longevity. We find that declining productivity growth and a lower world natural rate of interest are important for explaining the reduction in the New Zealand natural rate of interest, only partially offset by higher population growth, and to a lesser degree by increasing old-age labour force participation. The role of changes in government debt levels and longevity have been modest, with the change in these drivers over our analysis period being relatively small. Our results are based on defining the natural rate of interest as the long-run equilibrium real interest rate. In the model, the domestic natural rate of interest is equal to the world natural rate of interest plus a premium. The size of this premium reflects the difference between domestic capital stock and domestic savings, which is the net foreign position.
In the face of multiplicative uncertainty about the effects of a tariff on the trade balance, policymakers should err on the side of caution and use tariffs less aggressively. This important insight is illustrated in two separate cases, one where multiplicative uncertainty arises only in the pass-through from the tariff to import prices, and the other where multiplicative uncertainty is present in both the pass-through to import prices and the elasticity of the trade balance with respect to import prices.
The extant empirical literature recognises political instability and socio-economic conditions as key contributors to migration from Fiji. We propose that these, along with the broader aspects of institutional quality are fundamental determinants of out-migration from Fiji. The key objective is to assess whether broader institutional weaknesses serve as significant push factors influencing emigration decisions. To this end, we investigate the effect of institutional quality on migration flow from Fiji to major migration destination countries using the Poisson Pseudo Maximum Likelihood (PPML) technique from 2002 to 2022. Controlling for source and destination countries' income levels, population size, cultural, social, and physical distance, our findings suggest that migration flow from Fiji is significantly determined by the institutional quality indicators. Our results remain strongly robust across various econometric techniques that control for sample selection bias, zero-valued observations, and endogeneity concerns, which are addressed using Poisson instrumental variable (IV) regressions. We also support our benchmark results using sensitivity analysis from different institutional quality datasets. Hence, improving institutions and economic freedom in Fiji is key to reducing out-migration. Policy implications are discussed.
This study examines household solar photovoltaic (PV) adoption in Aotearoa New Zealand, addressing a major research gap in a country with strong renewable energy potential but low residential uptake. In the absence of official data, we developed a new nationwide dataset by applying deep learning techniques to high-resolution aerial imagery. We identify 12,010 solar-equipped residential rooftops across urban areas, covering 51% of all residential properties nationwide. A property-level regression within a Bayesian spatial framework reveals that solar uptake is positively associated with solar potential, property wealth, newer and larger homes, and steel roofing, but lower in urban cores, multi-unit dwellings and semi-rural areas. Spatial clustering persists after controlling for observable factors, suggesting localised influences. Uptake is higher on M & amacr;ori-owned and lower on company-owned properties. This study introduces a novel, publicly available dataset and provides new evidence on physical and governance-related factors to inform energy policy and strategies.
Household energy consumption is an important policy agenda in developed countries. As a result, studies on the root causes of household energy consumption are important for implementing policies. The paper contributes to policy and literature by examining the impact of working from home on households' energy consumption while considering the mediating effect of locus of control. The baseline results show that working from home increases a household's energy consumption. This finding is consistent across subsampling analysis and instrumental variable strategy. We identify locus of control as a mechanism of change through which working from home impacts a household's energy consumption.
The 2025 Long-Term Insights Briefing (LTIB) by the New Zealand Treasury is a valuable contribution to fiscal foresight, emphasizing resilience, transparency, and long-term thinking. It highlights core fiscal principles and outlines key challenges but stops short of deeper analysis. This policy note critiques the LTIB's limitations, including insufficient attention to monetary-fiscal interactions, debt sustainability, expectations management, and climate risks. It also notes gaps in distributional analysis, structural challenges, and strategic foresight. To strengthen future briefings, Treasury must adopt a bolder, more analytically rigorous agenda that incorporates complex risks, embraces new tools, and better aligns fiscal strategy with evolving macroeconomic realities.
Petrol prices are easily noticed and widely discussed. Thus, they may disproportionately influence how individuals form perceptions of inflation. We examine whether, and to what extent, petrol price shocks influenced inflation perceptions and headline inflation in New Zealand. To this end, we estimate structural vector autoregressions using Bayesian techniques. Two identification strategies are employed, with one relying on sign and zero restrictions and the other on partial identification. The results show that petrol price shocks had a slightly delayed, small and persistent effect on inflation perceptions, whereas their effect on headline inflation was instantaneous and short-lived. Shocks to overall energy prices produced effects similar to those of petrol price shocks. These findings suggest that fluctuations in petrol prices may help explain divergences between perceived and actual inflation.
We propose a new market indicator to track land input costs in housing: Land Cost to Floor Area (LCFA), defined as the ratio of land price to the permitted floor area ratio (FAR) set by local land use regulations. LCFA captures zoning policy effects on both the extensive (land quantity) and intensive (price) margins, making it sensitive to changes like upzoning, which typically allows more floor area per unit of land. It can also assess policies targeting residential land prices, such as the relaxation of urban growth boundaries. We outline a theoretical basis of LCFA, detail its construction, and illustrate its application using a zoning reform in Auckland that introduced medium- and high-density zones to areas previously zoned for low-density housing. The indicator reveals that upzoning significantly reduced land input costs in targeted areas. Furthermore, zones with lower LCFA experienced higher rates of housing starts, demonstrating the indicator's usefulness in evaluating anticipated zoning impacts.
