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The contribution of foreign borrowing to the New Zealand economy

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  • Anthony Makin
  • Wei Zhang
  • Grant Scobie

Abstract

New Zealand's persistent current account deficits and high external debt level remain central to ongoing economic policy debate. However, what is often overlooked is the potentially positive macroeconomic contribution made by foreign finance. This paper suggests that foreign capital inflows, the counterpart of current account deficits, have in fact made a significant contribution to New Zealand national income from a growth accounting perspective. A stylised national balance sheet that includes New Zealand's assets and foreign liabilities also places the stock of foreign debt in proper context and reveals that national wealth gains have been significant as well.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal New Zealand Economic Papers.

Volume (Year): 43 (2009)
Issue (Month): 3 ()
Pages: 263-278

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Handle: RePEc:taf:nzecpp:v:43:y:2009:i:3:p:263-278

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Keywords: foreign borrowing; national income; national wealth;

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References

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Cited by:
  1. 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.
  2. Julie Fry, 2014. "Migration and Macroeconomic Performance in New Zealand: Theory and Evidence," Treasury Working Paper Series 14/10, New Zealand Treasury.

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