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2014 Public Finance Great Festive Debate

The Chair in Public Finance and Government Economics Network hosted a topical festive debate on the deadwight loss of Christmas. Eric Crampton (Head of Research, New Zealand Initiative) and Patrick Nolan (Principal Advisor, New Zealand Productivity Commission) argued for the motion that the Christmas Extravaganza was a waste of time and money. However, they were ultimately defeated, through audience vote, by Bronwyn Croxson (Chief Economist, Ministry of Health) and Anne-Marie Brook (Principal Advisor, Treasury), who argued against this assertion. It was a fun afternoon, much enjoyed by all who attended.

Research Shows disparity between tax paid by women and men

Research undertaken by Professor Norman Gemmell, Victoria’s Chair in Public Finance, Honours student Athene Laws, and Omar Aziz from New Zealand Treasury and Harvard University, "Income and Fiscal Incidence by Age and Gender: Some Evidence from New Zealand" has been accepted for publication by international journal, Review of Income and Wealth.

Listen out for interviews on this research on Radio New Zealand and Newstalk ZB.

Summer Research Scholarship Projects

 The Chir in Public Finance will be supervising two Summer Research Scholarship Projects, beginning mid-November 2014. Both projects have a housing focus, detailed further below.

Why have New Zealand’s rents and house prices diverged?

For almost two decades residential accommodation rents have been approximately constant in real terms while house prices have more than doubled. This project will explore what factors may explain this divergence? In particular, what is known about the relationship between rents and vacancy rates in New Zealand? Also, how reliable is the empirical evidence that house prices have been driven in part by migration and what is the relation between rents and migration? A possible empirical extension would be to apply a VAR model for rents analogous to that for house prices similar to: Coleman, A. and Landon-Lane, J. “Housing markets and migration in New Zealand, 1962-2006”. RBNZ Disc. Paper 2007/12”.

An inquiry into the impacts of agglomeration, development contributions, land taxation on the rate and density of new development in Auckland.

 In 2010, the Auckland “super city” was formed through the amalgamation of seven cities consisting of around 200 suburban entities and towns. The amalgamation resulted in all local communities using capital values as the basis for local taxation (‘Rates’), whereas some communities had previously used land values. The new city also transitioned to single system of ‘development contributions’ paid by developers. In principle at least, economists often argue for the adoption of land value taxes instead of capital value taxes because the former encourage the highest and best use of land and are more efficient than a property tax. The Auckland change offers an excellent chance to conduct an empirical evaluation of the tax regime change; in particular, to assess whether changes in land use (e.g. new building developments) resulted from the legislated tax and development contribution changes.

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