2005 NZIER Economics Award winner
The NZIER Economics Award for 2005 is awarded to Dr Arthur Grimes.
The recipient of this year’s award has made a very significant contribution to public policy in New Zealand. He has provided at a high level all the ingredients of sound public policy: relevance, clear problem definition, rigorous analysis, communication of practical conclusions, willingness to debate the conclusions, and guidance for implementation where results are accepted.
Arthur Grimes’ long-standing interest in monetary economics started at the University of Waikato. It was cemented at the economics department of the Reserve Bank of New Zealand, in his PhD at the London School of Economics, in his position as Chief Manager, Financial Markets, at the Reserve Bank, and in his positions with the National Bank of New Zealand, initially as Chief Economist and, subsequently, as Chief Executive of the subsidiary that was responsible for the management of superannuation funds. This interest is presently apparent in his chairing of the Reserve Bank Board.
His own research and public policy contributions have been entirely focused on issues of relevance to the New Zealand economy. His interest in things monetary underwrote a long research programme into the behaviour of prices of many kinds: interest rates, exchange rates, wage rates, housing prices and inflation are examples. These investigations were carried out for reasons relating to the performance of the New Zealand economy and economic policy generally in New Zealand. One study examined the link between inflation and economic growth, concluding that higher inflation was associated with lower economic growth. Other research with monetary origins included investigation of desirable holdings of international reserves under fixed and floating exchange rates, monetary policy and the operation of the inter-bank market, the role of the exchange rate in monetary policy, and desirable public debt structure. In these studies he continued to examine the link between performance and institutional arrangements, and to seriously consider the practicalities of research results for public policy. He made an important contribution to the development of the Reserve Bank Act of 1989.
His broader interest in public policy was expressed in his role of Director of the Institute of Public Policy Studies at Victoria University of Wellington over the period from 1998 to 2002. This period marked a change, in which he researched and communicated findings on a much wider range of areas of public policy concern to New Zealand. He continues this diverse activity to this day. As a Senior Research Fellow at Motu, Economics and Public Policy Research Trust, and a consulting economist, he has pursued topics as distinct as property tax, defence policy, housing and regional economic issues.
Perhaps the best example of his regional work, and one which reflects his amalgam of skills in primary research, communication and exposing to public debate the policy implications of his work, is his consideration of the links between Australia and New Zealand, and the merits of a currency union between the two countries. In a series of papers with various co-authors, he has conducted primary empirical research and theoretical enquiry to enhance his understanding of a currency union. He reached the view that the union had merit because of the nature of the two economies, and has proceeded to develop and defend that view in a wide variety of forums. In doing so, he has exhibited his characteristic approach of openly and carefully researching, and articulating, the pros and cons of his assessment in the light of alternative views. Regardless of whether a currency union is ever actually implemented, Arthur Grimes’ contribution in elucidating the key underlying economic elements has led to new information, new insights and a most constructive debate. This typifies his sustained and widespread contribution to public policy in New Zealand.
