New Zealanders behave like American comedian Woody Allen, with an attitude to their economy that is "a bit depressed and neurotic" when in fact "by every possible metric, New Zealand is a success," a visiting US academic has told a top level seminar on the country's economic imbalances.
Viewers of Allen's movies soon realised "the whining is not fully justified", even if there are "certain traits that could be improved on," said Professor Sebastian Edwards from the University of California, Los Angeles and the US National Bureau of Economic Research.
"As Woody, many New Zealanders worry a lot," he told the two day seminar, jointly organised by The Treasury, the Reserve Bank, and Victoria University, who commissioned Edwards and two other highly regarded international economists to analyse New Zealand's economic weaknesses.
"They worry about the economy and about the country's position in the world.
"They are convinced things are going downhill, and believe that the future looks rather bleak."
Where Woody Allen has a beautiful girlfriend, interesting friends, a nice apartment and a well-paid job, New Zealand is "at the very top" of the World Bank's rankings for "doing business", has one of the strongest educational systems in the world, and is one of the least corrupt countries.
"There is no imminent danger of a crisis, growth is likely to be realtively robust in the next few years, net indebtedeness is indeed high but has declined recently, and policies to address low savings and vulnerabilities are being put in place, or at least are being considered."
But, like Woody, if New Zealand worked hard on a few glaring issues, it could make the country's position in the world "even better", and there was some evidence that political concerns were behind the failure to push ahead on policies to improve both productivity growth and competitiveness, which could improve economic performance "markedly."
Edwards also expressed surprise that economic policies aimed at insulating New Zealand, with its high levels of external private debt, from international economic shocks had not been discussed as an "insurance" issue.
"When the probability of 'bad states of the world' increases, it is generally recommendable to 'purchase' additional insurance."
And if insurance proves difficult to buy, 'self-insurance' mechanisms were often adopted.
Among options the government could consider were whether the country's international currency reserve holdings were sufficient to meet a crisis, whether more macro-prudential regulation of the banking sector could be justified, indexing government bonds to the terms of trade or the borrowing spread, and the establishment of pre-approved swap lines from major central banks.
Taxing capital inflows was another possibility, although this had not been found to be effective in other countries, with prudential regulations more likely to cover the risks such taxes were intended to mitigate.
Of the economic performance issues New Zealand faced, the most important were the decline in the tradeables sector over the last decade, and the country's relatively low services sector productivity, particularly in the public sector.
"For services as a group, New Zealand's productivity is only 75.3 per cent that of Australia during the most recent period (2001 - 2006)," Edwards said.