Professor Noy emphasises that the research findings do not suggest the earthquakes delivered benefits or were benign economic events. “The increased economic activity is due to the need to replace assets New Zealand had before. This is not very different from the ‘broken windows fallacy’ identified two centuries ago by a French economist, Frédéric Bastiat, who pointed out that breaking a window will lead to increased production and income for the glassmakers and installers who receive their payments, but does not lead to any increase in welfare or wellbeing. “There have also been offsetting shocks and policy changes that mask the effects of the earthquakes. "For example, it is possible that the expansive monetary policy embarked on by the Reserve Bank offset some of the effects of the shock, and that a favourable terms-of-trade environment, especially high agricultural export prices, also contributed to a rapid New Zealand recovery. "Without these countervailing forces, the New Zealand economy could have suffered worse.” He says the earthquakes have had a more significant impact at the regional level, although further study would be required to get a full picture. nbr.co.nz/article/christchurch-quakes-have-little-effect-nz-economy-nk-142677
Posted on: Thu, 11 Jul 2013 05:42:21 +0000
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