The Ups and Downs of New Zealand House Prices

This paper identifies the expansion and contraction phases of New Zealand's national and regional house prices, by employing techniques typically used to study cycles in real activity, the so-called Classical cycle dating method. We then enquire into the nature of the cycles, addressing five questions: (1) What are the New Zealand and regional house price cycles, and do the regional cycles differ from the national cycle?; (2) What are the typical durations, magnitudes and shapes of these house price cycles?; (3) Do cycles in house prices match cycles in economic activity, at either national or regional levels?; (4) Does it matter which of the two main sets of house price series are used? i.e. Quotable Value New Zealand (QVNZ) or Real Estate Institute of New Zealand (REINZ)?; and (5) Does the sample period matter? Findings are evaluated in the context of work by Grimes, Aitken and Kerr (2004), and Hall and McDermott (2005). Avenues for further research are suggested.House price cycles; regional business cycles; classical business cycle; New Zealand

Regional business cycles in New Zealand:Do they exist? What might drive them?

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand’s 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson- Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real national house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand’s aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices.Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

Regional Business Cycles in New Zealand: Do they exist? What might drive them?

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand’s 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson-Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand’s aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices. JEL Classification: C22, E32, R11, R12, R15 Keywords: Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

The environmental control and life-support system for a lunar base: What drives its design

The purpose of this paper is to identify and briefly discuss some of the ground rules and mission scenario details that become drivers of the environmental control and life support (ECLS) system design and of the logistics related to the design. This paper is written for mission planners and non-ECLS system engineers to inform them of the details that will be important to the ECLS engineer when the design phase is reached. In addition, examples illustrate the impact of some selected mission characteristics on the logistics associated with ECLS systems. The last section of this paper focuses on the ECLS system technology development sequence and highlights specific portions that need emphasis

An unobserved components common cycle for Australasia? Implications for a common currency

We use unobserved components methodology to establish an Australasian common cycle, and assess the extent to which region-specific cycles of Australian States and New Zealand are additionally important. West Australian and New Zealand region-specific growth cycles have exhibited distinctively different features, relative to the common cycle. For every Australasian region, the region-specific cycle variance dominates that of the common cycle, in contrast to findings for U.S. BEA regions and prior work for Australian States. The distinctiveness of New Zealand’s output and employment cycles is consistent with New Zealand retaining the flexibility of a separate currency and monetary policy, for periods when significant region-specific shocks occur

Who Does R&D and Who Patents?

This paper describes the construction of a large panel data set covering about 2600 firms in the U.S. manufacturing sector for up to twenty years which contains annual data on financial variables, employment, research and development expenditures, and aggregate patent applications. This data set is to be used in a larger study of R&D, inventive output and technological change. In the present paper we present preliminary results on the R&D and patenting behavior of the 1976 cross section of these firms. We find an elasticity of R&D with respect to sales of close to unity, with both very small and very large firms being slightly more R&D intensive than average. Because only 60% of the firms report R&D expenditures, we attempt to correct for selectivity bias and find that though the correction is small, it increases the estimated complementarity between capital intensity and R&D intensity. In exploring the relationship of the patenting activity of these firms to their contemporaneous R&D expenditures, we look with some care at the choice of econometric specifications since the discrete nature of the patents variable for our smaller firms may cause difficulties with the conventional log linear model. The choice of specification does indeed make a difference, and the negative binomial model, which is a Poisson-type model with a disturbance, is preferred. Substantively, we find a much larger output of patents per R&D dollar for the small firms, with a decreasing propensity to patent with size of R&D programs throughout the sample. However, this conclusion is highly tentative both because of its sensitivity to specification and choice of sample and also because we expect that errors in variables bias due to our focus on R&D and patent applications in a single year is far worse for the small firms.

Recessions and Recoveries in New Zealand’s Post-Second World War Business Cycles

We compute classical real GDP business cycles and growth cycles, contrast classical recessions with ‘technical’ recessions, and assess the sensitivity of our peaks and troughs to data revisions. Using this information we find that, on average, real GDP and employment cycles have had an 89% association. Other key findings are (i) New Zealand’s average pattern of recovery has differed from that for U.S. NBER cycles, but their most recent recession and recovery paths have been unusually similar; (ii) the strength of New Zealand's business cycle recoveries has been independent of the depth, duration, or severity of the preceding recession; and (iii) investment is an important component of expansions, and in the current cycle it has been residential investment and plant and equipment investment that have been unusually slow to recover their levels at prior business cycle peaks