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Tax Reduction, Debt Stabilisation and Policy Rules: An Application to New Zealand

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Author Info

  • Osborne, C.
  • Wells, G.

Abstract

Recent reforms in New Zealand have focused attention on the achievement of well-specific objectives for monetary and fiscal policy. The Reserve Bank Act requires that monetary policy be directed towards maintenance of inflation in the 0-2 per cent range. The Fiscal Responsibility Act specifies a number of criteria for fiscal policy, but in practice it has led to an emphasis on long-run stability of tax rates and stabilisation of the debt ratio. In this context, the main objective of this paper is to analyse short and long run effects of tax cuts using the NZM econometric model of the New Zealand economy.

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Bibliographic Info

Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 382.

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Length: 34 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:auu:dpaper:382

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Keywords: NEW ZEALAND ; TAXATION ; DEBT ; MONETARY POLICY ; FISCAL POLICY;

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