2003 NZIER Economics Award winner
The 2003 NZIER Economics Award is awarded to Robert (Bob) Buckle.
In the 1970s we had a simple and clear view of the business cycle in New Zealand – our economy depended on agricultural prices and changing preferential access to Britain. Policy consisted of regulation of internal transactions, barriers to imports, manipulation of the government’s fiscal position and successive artificial devaluations that were intended to keep the country competitive, but mainly ending up with inflation and balance of payments deficits. When the oil shocks happened we had a lot of trouble diagnosing what was happening and no new policy answers.
The recipient of this year’s award has helped us to a new understanding of what drives the ups and downs in the New Zealand economy and what to do about it.
He has helped identify and measure business cycles in New Zealand. Having done this, he has been able to separate out how much of our cycle is generated by different influences, and how much we ride along with foreign business cycles. His earlier work focused on why we consistently suffered higher inflation than our trading partners, with causal links to wage and price setting. As inflation has reduced, he has focused more on other internal drivers of business cycles, economic reform, other policy, domestic internal drivers of business cycles, economic reform, other policy, domestic shocks, incorporating novel features rarely attempted before but very important for New Zealand.
A strength of his work has been his combination of macro and micro approaches. Having looked at the business cycles from the macroeconomic viewpoint, he turned around and looked at them from the firm’s viewpoint. To do this he pioneered the construction and use of an important dataset to get novel answers to questions about how firms respond to shocks, what they do to their investment, employment and pricing intentions, how they accommodate surprising changes to demand, whether firm size matters, and, crucially for policy makers, whether what goes down will go up again in the same way. His research and contribution to debate reflects his unwavering desire for objective explanation of New Zealand’s macro and industrial performance.
If the recipient of this year’s award had never existed we would have a much poorer understanding of what makes the New Zealand economy go up and down. Firms haven’t changed their behaviour in response to his work, but policy has changed. The Government now knows more about how economic reform regimes make a difference. The Treasury understands better the effects of taxation on the business cycles, the Reserve Bank understands more about how inflation-targeting monetary policy has generally (but not always) reduced the volatility of business cycles, and we all understand more about New Zealand’s economic growth performance.
