This Distinguished Fellowship award is made to the most popular economist to the New Zealand public over the last thirty years. The only recognisable New Zealand economist to most people on the street would be Dr Brian Easton. For his long running Listener articles and the research that backed them up, Brian Easton is a most worthy recipient of this highest honour of the New Zealand Association of Economists.

Brian Henry Easton was born in Christchurch and like many famous economists, first trained in mathematics (with an economics minor) at Canterbury. He graduated from Victoria University in economics in 1966 while working at the New Zealand Institute of Economic Research, an institution he would return to direct from 1981 to 1986. Brian lectured early in his career at the University of Sussex and for twelve years at Canterbury University.

Brian’s capacity to write fortnightly economics articles for the Listener for 27 years is a signal to his commitment to understand the New Zealand economic and social environment, and to publicly communicate on an extremely wide range of issues in both micro and macroeconomics. It points to his 27 page CV of research and consulting papers that underpinned his guest lectures, honorary fellowships, travel awards and public commentary in print, radio and television.

In 2003, the University of Canterbury awarded him the degree of Doctor of Science for his research on the political economy of New Zealand. Political economy was well chosen because Brian has never been restricted by the neo-classical paradigm like so many with this pedigree. He eclectically mixed the mainstream paradigm Keynesianism, Institutionalism and work from other social sciences.

In his twenty years since leaving NZIER, Brian has been an independent researcher, and economic commentator, while holding positions at one time or other in five of New Zealand’s universities, currently including an Adjunct Chair at the Institute for Public Policy, Auckland University of Technology. He has also held visiting fellowships at the University of Melbourne, where he was Richard Downing Research Professor, and Georgetown and Harvard Universities, as a Fulbright New Zealand Distinguished Visiting Fellow.

Brian published eight books on macroeconomics, public policy, and political economy. He edited or jointly wrote another four books and he has published over thirty research monographs and reports.

His research career started with income distribution, but it widened into areas of social policy, health economics, macroeconomics, economic growth, and history.

Much of Brian’s research began with what the numbers emanating from statistical offices really mean. Few can match his understanding of the strengths and weaknesses of New Zealand’s official statistics. Brian is a quantitatively oriented, applied economist – a fellow of the Royal Statistical Society and a Chartered Statistician – and he is on advisory committees to the Statistics New Zealand and The Treasury. He is currently the economist on the Growth and Innovation Board; the private sector advisors to the Prime Minister and Cabinet on the government’s economic policy.

For his engagement with the economics profession, with policy makers and with the public, Brain Easton is a very suitable candidate for the award of distinguished fellow of the New Zealand Association of Economists.

Peter C B Phillips is an outstanding economist and econometrician.

Peter is in many ways a product of the New Zealand education system at its best. He was dux of Mt Albert Grammar School, and went to Auckland University with a scholarship. As might be expected, he won prizes in both mathematics and economics, but more telling was his decision to take Latin to fulfil the language requirement for an arts degree. Doing his masters, Peter was at Auckland when the economics department was strong, and he was especially fortunate to have as his thesis supervisor Rex Bergstrom – a unique teacher and researcher with the highest intellectual standards. The result of their collaboration was stylish piece of work, eventually published in Econometrica in 1972[1], the first of around 170 published articles Peter has produced to date[2].

The range of these is notable; for instance, in addition to the expected stream of technical pieces advancing the frontiers of econometrics, Peter has published poetry in Landfall[3]. But a special mention must be made of a charming reflective piece in 1994[4], where he muses about his life and the place of his family, in the guise of thinking about the day.

After this sound beginning, in 1971 Peter set off for the world, and the path has taken him via the London School of Economics (where he completed his PhD entitled “Problems in the Estimation of Continuous Time Models,” supervised by Denis Sargan) a teaching stint alongside Rex Bergstrom at the University of Essex. – where we worked on modelling the New Zealand economy together – through his first professorship at the University of Birmingham and on to the commanding heights of Yale’s Cowles Commission. He is now the Sterling Professor of Economics and Professor of Statistics at Yale University. In addition, he has been returning to New Zealand regularly for years and is University of Auckland: Alumni Distinguished Professor of Economics, as well as University of York: Adjunct Visiting Professor of Economics.

Peter is founding editor and a prolific contributor to Econometric Theory, where his wide ranging intellect and eager enthusiasm can be seen in a bewildering set of contributions from formal papers to interviews of eminent econometricians.

Peter’s awards and prizes are many, and it is hard to single several out for noting. But to select a few, we note particularly his election to membership of four distinguished scholastic bodies: the New Zealand Royal Society, the Econometric Society the American Statistical Association and the American Academy of Arts and Sciences. He has won the New Zealand Royal Society medal in science and technology as well as the NZIER Qantas economist of the year. But I suspect that among his own preferences would be awards he has received as teacher of the year and advisor of the year from the Yale University Graduate Economics Club.

As this necessarily brief history and his awards suggest, but do not prove, Peter is much more than an outstanding technician; he is a lively and enthusiastic person who lives a full life and enjoys a variety of pursuits. He is indeed an fine individual to know, and a deserving distinguished fellow of the NZAE.

[1] The dissertation was “The Structural Estimation of Stochastic Differential Equation Systems,” and the published piece, “The Structural Estimation of a Stochastic Differential Equation System,” Econometrica, Vol. 40, No. 6, November 1972, pp. 1021-1041.

[2] See https://korora.econ.yale.edu/phillips/

[3] Making the present Auckland economics department surely unique locally in having two professors who have published in New Zealand’s leading literary magazine.

[4] “Reflections on the Day,” Journal of Economic Surveys, Vol. 8, No. 3, September 1994, 311-316.

John Yeabsley

Sir Frank Holmes has been a prominent figure in New Zealand economics for the working life of everyone in this room. When I started work in Wellington in late 1957 Frank was a lecturer at Victoria University, having served, from there, as an adviser to the Royal Commission on Money, Banking and Credit. He was appointed to the Macarthy Chair at Victoria in 1959.

In retrospect the New Zealand economy of the 1950s has some of the charm of a golden age. New Zealand’s fully employed economy ranked amongst a select few nations in terms of per capita income, attaining a relative international standard that is now held before us a distant and probably unattainable ideal. I say some of the charm because, despite undoubted successes, the economic and social structure was loaded with stresses, including its narrow dependence on pastoral exports to the United Kingdom, the role of women and the economic position of Maori, that would play themselves out through succeeding decades.

The world in which Frank grew up was one devastated by economic depression, political extremism and ultimately war, a war that killed tens of millions, destroyed cities and basic infrastructures over vast swathes of territory and consummated itself in genocide and the development and use of nuclear weapons. Frank was drawn into that cauldron and sixty years ago, from the time of this gathering, that is in July 1944, he was a Pilot Officer, back in Auckland following a three-month spell dive-bombing Japanese positions in Rabaul.

Reading Frank’s account of his war experience I was struck by the lottery of our lives. Frank’s father served in Gallipoli and the Somme, Frank in the Pacific. My father, half a generation younger than Frank’s, missed the First World War and served in New Zealand during the second. And I, half a generation younger than Frank, have been spared war entirely. I share Frank’s gratitude that his “children and grandchildren have not been called upon to participate in wars”.

Along with many others Frank came away from war convinced that there must be better ways of settling disputes between peoples and a developing belief in the importance of improving economic and commercial relations between nations. Frank’s commitment to the promotion of open economic relations is reflected in numerous papers on aspects of New Zealand’s external and trade relations. An early and influential paper was Discussion Paper No 1 of the NZIER Should we have free trade with Australia? Over the years Frank has authored numerous papers on trade and economic matters including our relations with Britain and the United States. More recently he has paid particular attention to relations within the Asia Pacific region and has continued to reflect on the Australian-New Zealand relationship including his joint exploration, with Arthur Grimes, of the case for a common currency. He has been active in organisations promoting Asia-Pacific cooperation and was first chair of the Asia 2000 Foundation of New Zealand.

The economy of the 1950s was widely characterised as an externally constrained high demand economy, operating with one foot on the brake and the other on the accelerator.. It contained two central flaws. The commitment to sustained high demand threatened and, in time, delivered high inflation. Secondly, the external constraints of tariffs and import licensing distorted resource allocation thereby threatening lower real incomes.

The problems associated with inflation were another continuing concern of Frank’s working life that fits naturally with his central professional interests in the economics of money and finance and also with his role as a public economic adviser. His interest has continued to the present. In 1994 he reviewed the frameworks of Australian and New Zealand central banking and in 2000 made a submission to the independent review of monetary policy.

Looking further back, Frank was the founding chairman of the Monetary and Economic Council, serving in that role from 1961 to 1964 and from 1970 to 1972. Both fairly short time spans but during those years Frank played a particularly important role as a reliable and perceptive public analyst and discussant on a sequence of key macroeconomic issues.

On the issue of inflation Frank placed primary emphasis on the importance of getting fiscal and monetary policies right but he also paid attention to the institutions of the labour market as in the December 1971 report on Inflation and the labour market.

In his letter of transmission to the Ministers of Finance and Labour, Frank argued

“The nation cannot tolerate a continuation of increases in costs and prices on the scale we have been experiencing. … employers and unions who persist in making bargains which will lead to the national average of increases in pay rates rising above about 4 percent per annum, are inexorably driving the nation into a cruel choice between unacceptable price inflation, unacceptable stagnation and unemployment or both.”

In the event the players in this drama, like a bemused student faced by a multi-choice question, chose all three, unacceptable inflation, unacceptable stagnation and unacceptable unemployment. But the point that I want to make here is that independent bodies that can help argue the difficult issues that continually confront us assist political process. Frank performed those tasks with distinction, not only with the Monetary and Economic Council but also in a variety of roles, not least as founding chair of the New Zealand Planning Council.

An important attribute of such commentary is that whilst formally addressed to those in authority it also speaks to a public audience including the economic and social actors whose decisions jointly determine outcomes in the area under analysis. I believe it is difficult to overstate the importance of that role and suggest that current policy making suffers from the absence of bodies such as those that Frank chaired. In the ideal the commentator’s text is backed by independent research and reading and informed by discussions with officials and ministers, with key actors in the field, through access to academic research and last but not least by argument and discussion around the council table.

I have witnessed Frank in that role and been impressed by his quiet mastery of it. Frank holds firm opinions but he is not a dogmatic man and is always open to argument. In my experience he is an unusually strong team player. He keeps his eye on the ball and knows instinctively where the play is heading and that success will come most surely when individual strengths are combined and focused on common goals.

Frank’s focus is not solely economic as is evidenced by his continuing interest in education, his chairmanship of the Advisory Council on Educational Planning and of the NZ Council for Educational Research, and his 1975 knighthood for services to economics and education.

The wider field of social policy and cultural matters was most publicly evident during his association with the Planning Council. The 1976 report of the task force on economic and social planning, New Zealand at the Turning Point, which led to the creation of the Council, includes an interesting discussion on the changing balance between racial and cultural pluralities and the importance of focusing on the multicultural nature of New Zealand society, concluding that failures within “the halls of power” had “largely been fostered by an illusion that “minorities” should somehow be content to discard their identity and merge with the dominant group.”

I don’t know whether Frank, who chaired the Taskforce, or one of his associates, drafted these words but I do know that he will have weighed and approved them. Frank’s interest in multi and bi-cultural matters is also evident, in a somewhat surprising place, in a short discussion on the opening page of his 1972 text Money Finance and the Economy. Discussing the distinction between barter and gift-exchange in the pre-European Maori economy he wrote, in words which resonate in the context of current discussions on the seabed and foreshore

“What was acceptable was determined by a mixture of conventions, hints and tacit understandings. Each transaction had the appearance of being free and spontaneous, but in fact it was based on a strict system of obligation, both to give when occasion arose and to accept a gift when offered, with a moral commitment to repay by another gift of at least equal worth.”

I am not far from done but I want to pick out one other thread from Frank’s work, his long-term interest in defining the proper role of government in relation to the evolving balance of economic activity. Given his life-long commitment to promoting more open economic structures one might presume that Frank would adopt a strictly laissez-faire response, but this is not so. In the recently published version of a 1950s paper, The Quest for Security and Welfare in New Zealand 1938-1956, Frank reviewed the pattern of sectoral development and concluded that whilst the efficiency of manufacturing activity could have been assisted by a “somewhat less protective policy” efficiency could also have been promoted by more positive actions, such as institutional innovations in finance, increased spending on research and a decision to invest much more heavily in higher education.

In his Sir Sidney Holland Memorial Lecture of 1962, Planning for Growth in a Freer Economy Frank Holmes argued “the current urgency of longer-term planning”, on the need “to work consciously for the development of new exports and new markets, on the one hand, and the encouragement of maximum economy in the use of overseas exchange and the development of industries, using more domestic resources and components, to produce more of our requirements, on the other.”

He went on to discuss the case for longer-term consultative planning, a theme which was developed extensively, fifteen years later, in the Report of the task force on economic and social planning. Consultative planning has had a bad press in recent years and as one who has, like Frank, frequently advocated it, I have to admit that it has its problems and that the case for it changes through time. But, as I look back over New Zealand’s undoubted successes in transforming the structure of its economy, I suggest we can give thanks to people such as Frank for their undogmatic pragmatism, for their preparedness to review the strengths and weaknesses of the actually existing economy and its institutions. To try and define how their performance might be improved and then to argue and advocate the policies that might help us get there. And, at all times, to keep in mind that economic performance is instrumental and needs to be tested within a wider framework encompassing our individual and collective aspirations, both social and cultural.

Frank has had and continues to have a busy life, in academia, in government circles and in the business community, including directorships, at various times, with Norwich Union, State Insurance, the National Bank and Lloyds Bank in Australia. In the short time that we have here I have been able to no more than sketch the reach and depth of his interests. I want to end on a personal note. In our work we are continually reminded that we each have our own perspective, and reviewing Frank’s work I have been reminded of issues on which our judgements have differed. It is fundamentally important to our profession that we continue to explore and define our different viewpoints, because that is the way we test our ideas and develop frameworks of common understanding. Frank is an energetic and tolerant man who has significantly advanced my, and our, understanding of the workings of the New Zealand economy and its relations with the rest of the world. It gives me great pleasure to nominate Frank Holmes as a recipient of the inaugural award as a Distinguished Fellow of the New Zealand Association of Economists.

Dennis Rose

Roderick has made a considerable contribution to New Zealand over the past 30 years: as an economist and policymaker; as a corporate leader; and as a citizen supporting the arts and the disadvantaged.

Following his early days at Opunake and New Plymouth Boys High, Roderick studied Accounting and Economics at Victoria University. Much of his study was undertaken part time while he worked, first at the Union Steamship Company, and then at the Reserve bank. He came away from Victoria in 1968 with one of their first PhDs, on Foreign Investment in New Zealand Manufacturing, which was subsequently published. The doctorate was supervised by another of our Distinguished Fellows, Sir Frank Holmes.

While Roderick’s doctorate had contained little in the way of econometrics, he made up for this when he returned full time to the Reserve Bank in 1967. He was the driving force in the early development of the Reserve Bank econometric model, which was aimed at providing a consistent framework for monetary policy. From the time of the first modelling discussion paper presented to this Association’s conference in 1968, a significant research capability was built up at the Reserve Bank. As a new graduate economist at the Bank in the mid 70s, I can attest to the stimulating and enjoyable research environment that Roderick promoted.

In the policy arena, Roderick had begun in the mid 70s to promote the rationalisation and liberalisation of the financial system. Much of this work was put on hold, and indeed into reverse, with Muldoon’s re-regulation of the economy from 1982. However, once the Lange/Douglas Labour government came to power in 84, the policy reform process was back on the table – and on steroids. Appointed as Deputy Governor in 1982, Roderick was well placed to be in the vanguard of the reforms, in particular leading the charge on the removal of interest rate regulations and exchange controls and the floating of the NZ dollar in March 1985. Roderick was very persuasive with Officials and cabinet ministers of the day and, importantly, his ideas and commitment to the free market were closely aligned to those of Roger Douglas.

In 1986, at the request of David Lange and Roger Douglas, Roderick took on the major task of restructuring the Public Service as Chairman of the State Services Commission. His ability to see the big picture, to apply common principles of good governance, and simply get things done, contributed to major reforms in the Public sector over this period. In particular, he contributed to the separation of commercial and public policy objectives and the clarification of accountabilities, as typified in the creation of nine new SOEs in 1987.

After a very active year at the State Services Commission, Roderick made his transition to the corporate sector; first as CEO of the Electricity Corporation and then as CEO of Telecom in 1992. This was a period of major transition for both organizations with the Electricity Corporation transforming from a Government Department to an SOE and Telecom taking the next move from SOE to public company. From an economics perspective, Roderick extended his expertise in macro and institutional economics to Law and Economics and indeed further into regulatory economics and network analysis. Increasingly, as he then moved into directorship roles in the late 1990s, Roderick would focus on the principles of good corporate governance and their interaction with regulatory frameworks.

But of course you don’t get to be a top corporate leader just by being a good economist. Roderick once told me years ago that you need three things to succeed in management: Brains; People skills; and third an ability to get things done. I think you will agree with me that Roderick meets all three criteria with ease. The brains go without saying; the people skills are apparent from the loyalty that Roderick instills in the people around him and from his open and honest communication style. And Roderick’s ability to get things done has been his hallmark throughout his career, from the financial reforms of the 1980s to the corporate restructurings of the 1990s.

Roderick continues to apply his considerable talents and now broad experience in a number of top boardroom roles. He chairs three of New Zealand’s top companies: Telecom, ANZ National and Fletcher Building. And sits on several other boards. Roderick also contributes a considerable amount of his time to the disadvantaged and to the Arts. He has had a long association with the IHC, including a period as President and ongoing role as patron. Roderick and his wife Gillian have also contributed to the Arts in New Zealand over many years, supporting a number of individual artists and a range of music and arts organizations. Roderick currently chairs Te Papa and the City Gallery Wellington Foundation.

For the New Zealand Association of Economists, it is Roderick’s contribution to economic policy and public sector reform in New Zealand that are most important and the basis for his recognition as a Distinguished Fellow of this Association. However, Roderick’s much broader contribution to New Zealand makes him a particularly deserving recipient of this award.

Grant Spencer

The Council for the NZ Association of Economists has chosen four outstanding individuals for the inaugural NZAE Distinguished Fellows awards. It is an honour and a great pleasure to have been given the opportunity to prepare the citation for Conrad Blyth.

Early influences

Three themes have been central to Conrad Blyth’s career as an economist: business cycles, economic development in small economies exposed to commodity price cycles, and New Zealand’s slow post-war economic growth. These are core themes that continue to be important for New Zealand today.

Conrad’s interests in business cycles and the implications of commodity price cycles were ignited in the early 1950s while a student at University of Otago. Harro Bernadelli, a former student of Schumpeter, introduced him to the work of Schumpeter and to a system of simultaneous linear difference equations. Bernadelli also suggested an MA thesis on new trading relationships with South Pacific island societies.1

While curiosity over the nexus between cycles and commodity prices is part of being a New Zealand macroeconomist, Conrad’s research and initiatives attracted international attention and resulted in improved understanding of the properties of post-war business cycles in the USA and lasting innovations for monitoring and forecasting business cycles in New Zealand, Australia and the UK. His interest in economic development and commodity prices had a predominantly South Pacific focus. His expertise in this area was also recognized internationally.

Although Conrad’s research on NZ growth was to come later, at Otago he had also been introduced by Bernadelli to Austrian capital theories and went on to complete in 1958, a PhD thesis on capital theory at Cambridge University. Conrad walked the halls of Cambridge with Richard Goodwin, Richard Kahn, Nicolas Kaldor and Joan Robinson, experienced at first hand the playing out of the famous Cambridge capital debates, lectured in statistics and economics, and published articles on capital theory in Econometrica and Economica (Blyth, 1956, 1960a).

By the time he returned to New Zealand in 1960 as the first Director of the New Zealand Institute of Economic Research, Conrad was well versed in the 1950s revival of growth theory. Impressed in particular by the work of Solow, Conrad turned his attention to New Zealand’s economic growth. His pioneering New Zealand research on productivity measurement was complemented by important contributions to the policy debates surrounding protection and industrial development in the 1960s and economic reform in the 1980s.

The Treasury, Wellington, New Zealand. I am grateful to Conrad Blyth, Allan Catt and Des O’Dea for their fascinating recollections and anecdotes and to Sarah Spring for tracking down copies of early NZIER papers.

1. Conrad’s undergraduate degree at University of Otago was in both history and economics. The opportunity to be a paid tutor in economics influenced his choice of post-graduate study. History nevertheless was an enduring interest. After graduating MA in economics in 1951, as an assistant lecturer at Otago he taught the stage II economic history course. In Auckland in 1972, to satisfy the Department’s obligation to students, Conrad taught a three-paper economic history course. Of the view that a background in history is an essential part of an economist’s training, he zealously protected economic history for as long as it was possible, and introduced economic history into some of his Auckland masters papers.

The Treasury, Wellington, New Zealand. I am grateful to Conrad Blyth, Allan Catt and Des O’Dea for their fascinating recollections and anecdotes and to Sarah Spring for tracking down copies of early NZIER papers.

1. Conrad’s undergraduate degree at University of Otago was in both history and economics. The opportunity to be a paid tutor in economics influenced his choice of post-graduate study. History nevertheless was an enduring interest. After graduating MA in economics in 1951, as an assistant lecturer at Otago he taught the stage II economic history course. In Auckland in 1972, to satisfy the Department’s obligation to students, Conrad taught a three-paper economic history course. Of the view that a background in history is an essential part of an economist’s training, he zealously protected economic history for as long as it was possible, and introduced economic history into some of his Auckland masters papers.

Business cycles and macroeconomic forecasting

The study of business cycles appealed to Conrad not only from the academic point of view of explaining them, but also from the ways in which the theory and history of business cycles can provide an underpinning to macroeconomic forecasting. His first empirical research into the early post-1945 American cycles began at Otago, and continued in Cambridge, where he provided new perspectives on the 1948-49 US recession (Blyth, 1954, 1956). It is fitting that this year is the 50th anniversary of the publication of Conrad’s article on this topic in the Economic Journal. He continued this work when over a decade later in Canberra at the ANU he wrote a monograph on American cycles from 1946 to 1950, emphasizing the unique features of the 1948-49 recession and the rapid recovery which became a feature of many later American cycles (Blyth, 1969a).2

In his work in macroeconomic forecasting during the 1960s at the NZIER in Wellington, the Australian National University in Canberra and at the NIESR in London, business cycle analysis provided a continuous basis. During these stages Conrad was particularly concerned with the forging of new statistical tools to service forecasters. One of the origins of this interest was a lecture course he gave in Cambridge on economic statistics, which formed the basis of the text he published 1960 (Blyth, 1960b). This drew the attention of economists to British quarterly national income statistics.

The late 1950s was a watershed for the NZ economics profession. The NZ Association of Economists, BERL and the NZ Institute of Economic Research (NZIER) were all established in a short space of time. As the foundation Director of the NZIER in 1960, in a very short period of time Conrad assembled a staff of about ten, instigated a research programme, a series of seminars in major centers, and he started the Quarterly Survey of Business Opinion (QSBO) and Quarterly Predictions (QP).

The initial aim of the QSBO was “to provide information on current trends, to attempt some prediction of the immediate future, and to do this in a manner that the collection, compilation and publication of the survey can take place as soon as possible after the close of each quarter” (Gillion, page 58).3 Now entering its forty-fourth year, the NZIER survey has not only realized these initial aims but has also generated an internationally unique micro-firm data set that has become a basis for more fundamental research testing the properties of expectations, models of firm pricing, output, employment and investment behaviour and testing the microfoundations of business cycles.4

Quarterly Predictions was started using the NZIER’s own quarterly estimates of national income and expenditure deliberately to make it non-competitive with BERL and the Monetary and Economic Council. The NZIER also used QP as a vehicle for short notes on a variety of topics and this practice has continued.5 Quarterly Predictions is now in its fortieth year.

During these formative years the Institute emerged as an incubator for young economists. Research assistants at the Institute during Conrad’s time as Director included Rosemary Atkinson, Graham Crothall, Brian Easton, Colin Gillion, Kerry McDonald, David Sewell, and Stephen Turnovsky.

As Deputy Director of the National Institute of Economic and Social Research (NIESR) in London from 1968 to 1971, Conrad was primarily responsible for building a macroeconomic forecasting model. But he also reorganized an occasional survey of a panel of British firms, and his most lasting managerial achievement at the NIESR was helping to persuade the British Treasury to finance research at the Institute to develop a British set of leading indicators, on the lines of the well established leading indicators of the United States. Des O’Dea was recruited to undertake the research, and for some decades now the British Central Statistical Office has published and analysed its indicators.

After returning again to New Zealand in 1972 to take up the position of Professor and Head of Department of Economics at University of Auckland, Conrad’s interest in business cycles showed itself in the macroeconomic lectures at different levels which he gave each year. These included the master’s classes he gave from time to time on the Great Depression and on Business Cycles, and the theses he encouraged. Conrad recalls that one of the most memorable amongst these was a course paper by Hugh Fletcher on the question as to whether the Great Depression could happen again.

After his last sabbatical in 1988 Conrad turned his attention to international cycles (Blyth 1992a, 1992b). Despite the view that floating exchange rates have increased the correlation between national cycles, he believes the historical-statistical evidence shows a continuous sequence of correlated cycles since 1945, including at least one pronounced international cycle in the late 1950s.

2. Conrad came to favour flexible shock-response models rather than the non-linear cycle models (like those of Richard Goodwin, who had been one of Conrad’s supervisors at Cambridge) then becoming popular amongst theorists.

3. Tendency surveys like the QSBO were first organized by the ifo Institut fur Wirtschaftsforschung (the Munich Business test or “Konjunkturtest”) at the end of 1949 to overcome economic data deficiencies in post-war Germany and to obtain more immediate information about business activity in an economy undergoing major reconstruction (Theil, 1952). Although there was interest amongst New Zealand academics in the ifo Institut survey prior to 1960, Conrad recalls that the NZIER survey was originally based on the ACMA–Bank of NSW industrial trends survey (itself based on the ifo Institut of Munich’s survey) that had started in 1960. When he shifted to Canberra in 1965 as Professorial Fellow in the Economics Department of the Research School of Pacific Studies, Conrad advised the Bank of NSW economists on a revamping of their survey, and undertook some research into the extent to which data from that the Australian survey indexes could be used to estimate and forecast corresponding official Australian economic data (Blyth, 1967).

4. Henri Theil (1952) had initially raised interest in the research potential of the micro firm data available from tendency surveys of this type and Zimmerman’s (1997) survey illustrates how that potential has been exploited.

5. Allan Catt was the first Editor of Quarterly Predictions. The first short articles in QP were written by Conrad Blyth (1964b) on “Research into New Zealand’s economic growth” and by Peter Elkan (1964) on “Industrial growth and world trade”.

The South Pacific, economic development and commodity prices

Stimulated by his masters thesis research, Conrad visited Fiji in 1951 to inquire into recent colonial policy which was withdrawing Fijians from the market economy. His interests in the South Pacific continued in Canberra, where he used budget data from anthropological fieldwork to estimate a marginal propensity to save in South Pacific economies (Blyth, 1969b), and continued while in Auckland.

In the early 1970s he was part of a United Nations Development Advisory Team developing measurement of non-monetary activities (UNDAT, 1974). In the 1980s, following an invitation from the Institute of National Affairs, Port Moresby, to undertake some study of Papua-New Guinea’s problems, Conrad made several research visits to PNG, and prepared reports on issues of public expenditure and budgetary problems (Blyth, 1988, 1991, 1994). He saw PNG as a case study of the effect the international business cycle had on commodity prices and hence on a developing economy. These reports contain the views he formed about the relationship between the monetary and non-monetary economies of PNG, and the effect that export fluctuations had on the budget.

His interest South Pacific economies (as well as his masters lectures on comparative economics) encouraged some students, like Alan Bollard, to write theses on Pacific island issues, and also encouraged others, like Jon Altman, to go further in the study of indigenous economies.

International recognition of Conrad’s expertise in commodity markets and South Pacific development was reflected in appointments to several internationally sponsored inquiries. In 1975 he was a member of an UNCTAD committee of experts to report on the problems of non-oil commodity producers (i.e. low and unstable commodity prices).6 He stayed on in Geneva for some weeks to assist the Secretariat in developing an “Integrated Programme for Commodities” by writing one of the papers (UNCTAD, 1975). Earlier, in London, he had represented the NIESR in an International Monetary Fund sponsored and funded inquiry into the nature and feasibility of commodity price forecasting.

In 1982-83 Conrad was a member of a Commonwealth Study Group that reported on the problems of the world financial and trading system under the title Towards a New Bretton Woods (Commonwealth Secretariat, 1983). The wide-ranging report included long-term recommendations concerned with reducing cyclical instability and risk of shocks, improving multilateral control of cyclical instability, increased symmetry in balance of payments adjustment, stabilization of commodity prices, and providing more regular development assistance.7

6. The group divided into a Nicolas Kaldor group advocating price stabilization and an American group led by Hendrick Houthaker who said stabilization would not work, almost the difference between fix and flexible price models. Conrad’s friendship with Kaldor survived his joining the Houthaker’s camp.

7. Conrad recalls that the Group was strongly anti-American, tending to blame the international instability on the United States’ monetisation of its debt due to rising military expenditures. Conrad took some consolation in his successful attempt to get the report to lay off the United States, but he could not get the developing countries to accept any responsibility.

The New Zealand theme

Under Conrad leadership in the early 1960s, New Zealand’s slow post-war growth was to be the NZIER’s central research theme. In the first NZIER research paper Conrad generated what appears to be the first published growth accounting decomposition and estimates of aggregate and sectoral labour productivity growth for New Zealand (Blyth, 1961). This paper also exposed New Zealand’s labour productivity growth in an international context. Although in light of the subsequent insights from the growth convergence literature New Zealand’s labour productivity growth might have been expected to lag that for the post-war reconstructing economies of Japan and Western Europe, Conrad was able to show that New Zealand labour productivity growth during the 1950s was also slower than for the USA and about half the growth rate for Australia.

The problem as Conrad viewed it, was that the overall growth in output and labour productivity growth was hampered by a “pseudo-growth” policy of promoting manufacturing via border protection and inflation. By raising the costs of farming and aggravating the shortage of farm workers, this strategy had simultaneously raised farm capital requirements while reducing funds available for farm investment without necessarily improving aggregate productivity.8
9
This initial study was followed by development of suitable data (for example, Blyth and Gillion, 1962) and more groundbreaking research for New Zealand investigating output, employment and productivity growth in manufacturing (Blyth and Hamer, 1963), This latter paper investigated whether the growth in the labour force attracted into manufacturing and services was being drawn into industries with lower output and productivity growth than in farming. Their conclusion that there was scope for raising overall growth by improving productivity in lagging manufacturing firms was followed up with seminars and papers highlighting differences in productivity performance across manufacturing, discussing the requirements for successful firms in New Zealand, and encouraging firms to be exporters (Blyth, 1963a, 1963b, 1964).

Conrad emphasized three factors as fundamental to growth in the productivity of New Zealand firms: management, capital and scientific research (Blyth, 1964, page 15). Capital because New Zealand firms seemed to have high capital-output ratios, new investment because it was likely to be the key means of new technology adoption, and scientific research because it was the source of new ideas and technology. However, to improve output growth to 4 per cent per annum was likely to require an unrealistically high rate of saving thereby necessitating a reallocation of capital or improved efficiency in the use of capital (Blyth, 1961, pages 10–12). Further, Conrad noted New Zealand’s heavy dependence on imported ideas and technology and considered that the absence of technical skills and scientific investigation was a “disadvantage, which our economy must overcome.“ (Blyth, 1961, page 14).

Inquiry into the performance of New Zealand firms was complemented by the development of a linear programming model of the NZ economy to investigate the relationship between the exchange rate and real wages (Blyth and Crothall, 1962, 1965). Conrad also used the neoclassical model of growth to evaluate, at the aggregate level, savings rates required to achieve alternative growth rates for particular rates of productivity growth in circumstances where the economy is balance of payments constrained (Blyth, 1965).

Conrad found it difficult to escape the arguments over protection and import licensing. His private solution was to float the exchange rate and dismantle protection. But these were dangerous waters in view of the way the Institute was financed. His first venture into these waters went largely unnoticed. In his introduction to the 1964 book which he edited, The future of manufacturing in New Zealand, Conrad cautiously considered how the economy might develop in response to “a liberalised environment……with no quantitative import licencing and no discrimination in tariffs or in export incentives, but with an adjustment of the exchange rate” to maintain internal and external balance. He conceded, however that “the case of wholesale economic liberalisation is unlikely to be government policy in New Zealand” (Blyth, 1964a, page 15).

A year later when he dived into these waters again, he was noticed. During a lecture series by Conrad to Waikato farmers, Prime Minister Keith Holyoake complained to the Chairman of the Board of the NZIER (Jim Andrews, who was the CEO of the National Bank) that the banks were trying to railroad him. Allan Catt recalls the incident as follows: “Conrad’s solution was widely reported and caused consternation all around. The first I knew about it was when the Chairman of Trustees, Jim Andrews appeared at the Institute virtually shouting ‘Where’s Blyth, where’s Blyth?’ I said he’s drumming up support in Hamilton. What’s wrong, can I help? ‘He’s gone over the top this time; he’s suggested we float the exchange rate. Everyone’s up in arms. Get him for me now, I want to have a word.’9 Conrad recalls that his response to Andrews that he was”simply indulging in some adult education” seemed to placate the Chairman of the Board.

Conrad returned to the issue of New Zealand’s growth several times over the next twenty years. He published a paper that compared different visions of New Zealand’s political economy and suggested that the current model of industrialization implied a subsidy from farming to the urban labour force (Blyth, 1966). In his inaugural lecture at Auckland he suggested that the process of industrialization from the 1880s to the 1970s could be explained firstly by the growth of farming (meat freezing, motor vehicle repair, etc) and secondly by the more or less continuous decline in New Zealand real wages relative to the rest of the world. He was Chairman of an NDC committee on Industrial Protection that reported to the government in 1972. And he sustained his interest in this issue when, back in New Zealand after his time at the OECD, he became Deputy Chairman of the Planning Council and convener of its Economic Monitoring Group (EMG).

In the years 1982 to 1985 the EMG shifted its focus from short-term macro forecasting to issues surrounding New Zealand’s growth, and published a series of reports which concluded that faster, sustainable growth required an extensive liberalization of the economy (Economic Monitoring Group, 1983, 1984a, 1984b). In this, the EMG was probably one voice amongst many, but insofar as the Treasury’s reports ended up in the Prime Minister’s waste paper basket, possibly the EMG’s reports were more widely read.

The EMG’s reports assumed that liberalization must proceed at the micro level, before major changes in the macro environment could be attempted. While supportive of the eventual microeconomic revolution (see for instance Blyth, 1987, page 4), as an observer of the liberalization process Conrad considered that the sequence of reform, the size of the budget deficit and inflation hampered reform and contributed to the unexpected costs and the long time New Zealand had to wait for the benefits of reform (Blyth, 1987a, 1987b). In his address to the NZIER AGM in 1987 entitled “The economic consequences of Mr Douglas”, he argued that unless the market gives the private agents a clear long-run guide as to what the real interest rate is going to be, things will go awry (Blyth, 1987b, page 6). He also emphasised the complications to price signalling that high inflation can cause, a theme that was prominent in his 1977 book on New Zealand inflation (Blyth, 1977).10

Conrad’s contribution to New Zealand public policy extended beyond industrial policy. In 1966-67 he was a member of the Ross taxation committee, commuting from Canberra to assist in a report that made the first tentative suggestions of a GST type tax. In the 1970s he became a member of the National Research Advisory Council, where as chair of the Social Sciences committee he was able to put government research funding for the social sciences on a regular, independent basis.

8. The phrase “pseudo-growth policy” is from Blyth (1987) in which he describes this growth “medicine” as “tablets of demand management, or slow drips of protection” (page 2).

9. Private correspondence from Allan Catt, June, 2004.

10. In his 1977 book, Conrad regarded the option of indexation as a way of learning to live with inflation as a “dangerous option, – particularly for a small specialist exporter of materials and foodstuffs, whose ability to maintain a fully employed workforce depends on a continuous import of material and capital goods” (Blyth, 1977, pages 85 – 86).

Rolling stone, leader and mentor

One obvious feature of Conrad’s career has been his tendency to move from one country to another. However this feature is not unique to Conrad. From the earlier giants like JB Condliffe and Horace Belshaw to the latter-day examples of Malcolm Fisher, Rex Bergstrom, Peter Lloyd, Steven Turnovsky and Peter Phillips, New Zealand economists have shown a tendency to roll – and some may even have gathered moss. Of course in some respects this reflects the normal brain exchange, although it also reflects the internationalization of the economics profession. With each roll, Conrad made significant contributions to our understanding of business cycles, the significance of commodity prices in cycles and development, and to New Zealand economic growth research and policy debates.

As a leader in whatever position he has held, whether as Director of the NZIER, President of the New Zealand Association of Economists briefly in 1964-65, Deputy Director of the NIESR, Professor and Head of the Department of Economics at the University of Auckland, Head of a division at the OECD or member of any number of committees of enquiry, he brought a touch of class and much credibility. In a full career he even found time in 1976-77 to become the Listener’s first Economics columnist, being succeeded by his ex-research assistant Brian Easton.

He also brought a capacity to unostentatiously acquire resources and get things done. Starting from nothing at the NZIER, he quickly established the Institute to be a major voice in economic policy discussion in New Zealand. He put it on a foundation such that it has never faltered to this day and the initial aims of its publications QSBO and QP remain relevant today. His period as head of the Economics Department at Auckland from 1972 to 1977 and again from 1982 to 1986 was one of considerable expansion. The early 1970s and the 1980s was a period a rapid growth in student enrolments and international competition for academic economists.

In these roles in particular he had a major influence on the future shape of two institutions of significance to the New Zealand economics profession. By example, encouragement and teaching, Conrad has attracted hundreds of students into the discipline to which he was drawn over 50 years earlier, and has inspired many of his students and colleagues to investigate cycles, growth and development in the New Zealand and South Pacific economies.

For these reasons the NZ Association of Economists has chosen Conrad Blyth as an inaugural recipient of the Distinguished Fellow Award.

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Robert A Buckle