The Dismal Science

The cost of a rolling omnishambles

Eric Crampton Apr 15, 2021

The travel bubble with Australia has not brought room for others to come into the MIQ system from overseas. Instead, spaces are being decommissioned. Why? The system is leaky. The government cannot afford to let riskier people into those spaces, because the system can’t handle them. My column in Insights last week went through the problem. Maintaining quarantine-free travel … Read More

Getting to Net Zero

Eric Crampton Apr 12, 2021

We have not been fans of the Climate Change Commission’s draft report. New Zealand has an Emissions Trading Scheme with a binding cap, and a declining path for net emissions in the covered sector. Measures taken within the covered sector cannot reduce net emissions. NZU not purchased by one sector get purchased and used by another. Regulatory measures around coal boilers … Read More

Vaccination priorities

Eric Crampton Mar 10, 2021

Chris Hipkins announced some of the government’s prioritisation for the coming vaccination campaign.  I don’t quite get it, given the situation here differs considerably from the situation abroad. Here and abroad, there’s been priority on those at most risk. But who’s at most risk differs. Here, it’s people working in the border system, and the government has been entirely correct … Read More

Border Costs

Eric Crampton Mar 02, 2021

Cecile Meier walks us through some of the costs of a border system that has neither been able to safely scale up to meet need, nor able to find any reasonable way of prioritising entry into those scarce MIQ spaces. When Zane Gillbee hugged his family goodbye in South Africa before moving to Wellington, his daughter Lyla was still … Read More

Blessed are they that have not seen the model, and yet have believed

Eric Crampton Mar 02, 2021

The Climate Change Commission’s recommendations span the breadth of the economy. They are required to come up with sector-by-sector climate budgets consistent with getting New Zealand with net zero emissions under the Zero Carbon Act. The sector-by-sector budgets rest on underlying models. The models build predictions about what will happen as ETS prices rise, and what will happen when some … Read More

For a bigger carbon dividend

Eric Crampton Mar 01, 2021

New Zealand has an excellent Emissions Trading Scheme covering everything except agriculture – a non-trivial exclusion, but we can come back to that later. The ETS has a cap. Net emissions from the covered sector cannot exceed the cap. So any other regulations that affect sectors covered by the cap only shift things around within the cap and affect the … Read More

Forests and intertemporal equilibrium

Eric Crampton Feb 17, 2021

I’m a bit of an ETS-absolutist. Or at least a carbon-pricing absolutist, in a place the size of NZ. I think the Weitzman reasons for preferring a carbon tax to an ETS are second-order relative to political economy considerations, and any weight at all put on switching costs makes it ludicrous to want NZ to flip from an ETS to … Read More