An Econometric Analysis of a Production Function for New Zealand

Using the capital stock series recently released by Statistics New Zealand, two approaches have been employed to estimate a production function. The first approach is based on the estimation of a constant elasticity of substitution (CES) production function with a value added form. The second approach is based on a nested CES function. Using the nested structure, we allow imports as an intermediate input in the production block. The estimated results reveal that the data rejects the Cobb-Douglas specification and the use of the value added form is not justifiable.CES production function, Cobb-Douglas specification

Does Quality Matter in Labour Input? The Changing Pattern of Labour Composition in New Zealand

The composition of the New Zealand workforce has changed considerably over the past two decades. Qualification levels have risen, labour force participation has trended upwards for women, immigrants have increasingly been sourced from Asia, and the large baby-boom cohort has contributed to an ageing of the workforce. The question is whether such compositional changes have affected the quality of labour. Our estimates show a large rise in labour quality since 1988 as a result of increasing qualification levels, particularly at university degree level. With age as a proxy for work experience, an ageing of the workforce also contributed to rising labour quality. The annual rise in labour quality averaged 0.6% from 1988 to 2005, which was comparable to the experience of Australia, the United States and the euro area. Although labour quality rose in every year of our sample period, the rise was not constant over time. The increase was much stronger in the first half of the period (1988 to 1997) than in the second half (1997 to 2005). By drawing a large number of lower-skilled people into work, the strength of recent employment growth may have dampened growth in labour quality. Accounting for changes in labour quality has implications for labour productivity. Almost half of labour productivity growth of 1.4% per annum since 1988 can be attributed to the rise in labour quality. Labour productivity measured as output per quality-adjusted working hour rose by 0.8% per annum on average from 1988 to 2005, with annual growth of 0.5% in the first half of the period and 1.1% in the second half.Labour Quality; Human Capital; Wage Differentials; Labour Productivity

An Introduction to the New Zealand Treasury Model

The Treasury is the New Zealand government’s lead advisor on economic and financial issues. Part of this advice consists of providing the government with forecasts of economic and fiscal variables. Economic forecasts are important, not only as a basis for forecasts of tax revenue, but also in informing the government of the macroeconomic environment in which proposed fiscal policy settings will operate. The New Zealand Treasury Model (NZTM) is an important part of the economic forecasting process at the Treasury. This paper has three purposes. The first is to give readers an idea of the key features of NZTM. The second is to detail major changes to the model since the last published documentation of the model (Szeto, 2002). These model developments have enhanced NZTM to provide more detailed forecasts. Key changes include the disaggregation of deflators into the various expenditure GDP components, the introduction of consumption and capital goods imports into the model (rather than just treating them as intermediate imports) and the disaggregation of the inflation equation into tradable and non-tradable components. The final purpose of this paper is to outline briefly NZTM’s role in the Treasury’s forecasting process.Computable general equilibrium model; New Zealand economy; forecasting

A Comparison of the NZTM and FPS Models of the New Zealand Economy

This paper investigates and compares the dynamic properties of the New Zealand Treasury model (NZTM) and the current version of the Reserve Bank’s Forecasting and Policy System model (FPS). The main use of both two models is to produce macroeconomic forecasts. The NZTM model produces forecasts that are used as an input into the final forecast numbers presented in the Economic and Fiscal Updates. The FPS model is used to produce the published forecasts in the Reserve Bank’s quarterly Monetary Policy Statement. Both models contain a number of judgements around the structure of the economy, the key shocks that impact on the economy, and how the economy evolves in response to these shocks. The paper concludes that one of the main differences between the two models occurs in the impact of a world price shock on the real exchange rate and subsequently on exports and imports. Another key difference is the mechanism through which the net foreign asset position returns towards equilibrium. In FPS, the external balance is partly attained by forward-looking consumers who adjust spending to reach desired wealth positions. In contrast, the real exchange rate is the key mechanism in NZTM for re-establishing equilibrium.New Zealand; NZTM; FPS; Macroeconomic forecasts; Net foreign asset position; forwarding-looking consumers; Real exchange rate

Establishing a core outcome set for peritoneal dialysis : report of the SONG-PD (standardized outcomes in nephrology-peritoneal dialysis) consensus workshop

Outcomes reported in randomized controlled trials in peritoneal dialysis (PD) are diverse, are measured inconsistently, and may not be important to patients, families, and clinicians. The Standardized Outcomes in Nephrology-Peritoneal Dialysis (SONG-PD) initiative aims to establish a core outcome set for trials in PD based on the shared priorities of all stakeholders. We convened an international SONG-PD stakeholder consensus workshop in May 2018 in Vancouver, Canada. Nineteen patients/caregivers and 51 health professionals attended. Participants discussed core outcome domains and implementation in trials in PD. Four themes relating to the formation of core outcome domains were identified: life participation as a main goal of PD, impact of fatigue, empowerment for preparation and planning, and separation of contributing factors from core factors. Considerations for implementation were identified: standardizing patient-reported outcomes, requiring a validated and feasible measure, simplicity of binary outcomes, responsiveness to interventions, and using positive terminology. All stakeholders supported inclusion of PD-related infection, cardiovascular disease, mortality, technique survival, and life participation as the core outcome domains for PD

Tests of NZ equilibrium exchange rates hypothesis : A cointegration approach

This study is an empirical testing of NZ equilibrium exchange rate hypotheses using the method of cointegration. This cointegration technique does not only overcome the problem of the non-stationarity of macroeconomic time series variables but also provides a convenient method for testing the economic hypotheses. In this study, two equilibrium exchange rate hypotheses proposed by Williamson (1985) have been tested. The first hypothesis is known as current market equilibrium - ie, the equilibrium that would obtain if market agents had full knowledge of all relevant facts and reacted rationally to that knowledge. Instead of quantifying the current market equilibrium rate, this study examines whether the foreign exchange market is 'efficient' enough to produce the current market equilibrium rate. Then this equilibrium hypothesis is subjected to two efficiency tests. First, we test the theory of covered interest parity hypothesis. Second, the predictive performance of forward market is examined. Our results provide strong evidence that the covered interest parity condition holds in the New Zealand foreign exchange market. However, our results fail to accept the forward market efficiency hypothesis. Given the above empirical results, it can be suggested that the market is not efficient enough to ensure that the current market equilibrium is achieved. The alternative equilibrium exchange rate hypothesis is known as fundamental equilibrium. This equilibrium hypothesis suggests that the equilibrium real exchange rate is a function of a number of real variables. In this study, a three-sector general equilibrium model is presented and the real exchange rate is defined as the relative price of nontradables to importables (or the relative price of nontradables to exportables). The model suggests that the determinants of the equilibrium real exchange rate include the terms of trade, factor endowments, welfare levels and real balance of payments. The empirical evidence rejects the null hypothesis that real exchange rates (RERs) have persistently deviated from their fundamental equilibrium values. As a result, an Error Correction Mechanism (ECM) model of RER determination is constructed. However, the error correction terms in the model indicate that the actual RERs in the period from 1985 to 1990 have indeed exhibited a behaviour different from what the fundamental variables suggested. Furthermore, the estimated model suggests that the rate of convergence to the equilibrium is very slow. In order to examine the dynamic interactions among the variables and the stability of the system, the impulse analysis is conducted with the ECM model and the VAR in differences model. The results of this analysis suggest that the response of both models are similar. Finally, a forecasting experiment is carried out to compare the forecasting ability of the ECM and VAR in differences models. Results of the experiment confirm that the ECM model performs better at the longer horizon than the VAR in differences model

An in vitro study of the antioxidant activities and effect on human DNA of the Chinese herbal decoction ‘liu wei di huang’

A Chinese medicinal formulation, ‘Liu Wei Di Huang’, and its individual components have been tested for the genoprotective effect on human DNA by the comet assay. Results showed no DNA protection contributed by this prescription. However, the aqueous extracts of individual herbs, namely Cortex Moutan and Rhizoma Dioscoreae, were able to decrease by 10–15% the DNA stand break from hydrogen peroxide-mediated oxidative stress. This provides insight to further evaluate the interaction among herbs and the search for the active ingredient responsible for the DNA protective effect