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Financial sector amplification and credit cycles in New Zealand

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Author Info

  • Rebecca Craigie
  • Anella Munro

    (Reserve Bank of New Zealand)

Abstract

This article explores some of the channels through which the financial system may amplify business cycles in New Zealand. Such amplification (‘procyclicality’) has been of interest for decades when considering financial booms and crises. There has been particular interest recently in understanding mechanisms through which the financial sector contributed to both the expansion of credit in 2003-07 and the subsequent pressure to reduce leverage during the financial crisis. This article focuses the discussion on New Zealand with emphasis on the credit boom of 2003-07 and the recent fall in credit growth, though the latter has been modest by international standards.

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File URL: http://rbnz.govt.nz/research_and_publications/reserve_bank_bulletin/2010/2010jun73_2craigiemunro.pdf
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Bibliographic Info

Article provided by Reserve Bank of New Zealand in its journal Reserve Bank of New Zealand Bulletin.

Volume (Year): 73 (2010)
Issue (Month): (June)
Pages: 15-34

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Handle: RePEc:nzb:nzbbul:june2010:3

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  1. Aoki, Kosuke & James Proudman & Gertjan Vlieghe, 2003. "House prices, consumption, and monetary policy: a financial accelerator approach," Royal Economic Society Annual Conference 2003 7, Royal Economic Society.
  2. Andrea Gerali & Stefano Neri & Luca Sessa & Federico M. Signoretti, 2010. "Credit and Banking in a DSGE Model of the Euro Area," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 107-141, 09.
  3. Charles T. Carlstrom & Timothy S. Fuerst, 2001. "Monetary policy in a world without perfect capital markets," Working Paper 0115, Federal Reserve Bank of Cleveland.
  4. Skander Van den Heuvel, 2006. "The Bank Capital Channel of Monetary Policy," 2006 Meeting Papers 512, Society for Economic Dynamics.
  5. Ben Bernanke & Mark Gertler & Simon Gilchrist, 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," NBER Working Papers 6455, National Bureau of Economic Research, Inc.
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Cited by:
  1. Lamorna Rogers, 2013. "A new approach to macro-prudential policy for New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 12-22, September.
  2. Daan Steenkamp, 2010. "New Zealand’s imbalances in a cross-country context," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 73, pages 37-49, December.
  3. Tony Wolken, 2013. "Measuring systemic risk: the role of macro-prudential indicators," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 13-30, December.

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