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Estimating New Zealand’s neutral interest rate

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Abstract

The neutral interest rate is an important concept in monetary policy decision making, helping the Reserve Bank understand the extent to which current policy settings are either contractionary or expansionary with respect to the macroeconomy. This note outlines the range of technical approaches the Reserve Bank uses to estimate the nominal neutral 90-day bank bill rate. These approaches help inform the monetary policy judgements of the Bank’s committees.

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  • Adam Richardson & Rebecca Williams, 2015. "Estimating New Zealand’s neutral interest rate," Reserve Bank of New Zealand Analytical Notes series AN2015/05, Reserve Bank of New Zealand.
    • Handle: RePEc:nzb:nzbans:2015/05
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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Analytical%20notes/2015/an2015-05.pdf
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    References listed on IDEAS

    as
    1. Michael Kirker, 2008. "Does natural rate variation matter? Evidence from New Zealand," Reserve Bank of New Zealand Discussion Paper Series DP2008/17, Reserve Bank of New Zealand.
    2. Leo Krippner, 2010. "Connecting the dots: a yield curve perspective on New Zealand’s interest rates," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 73, September.
    3. Aaron Drew & Rishab Sethi, 2007. "The transmission mechanism of New Zealand monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, June.
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    Cited by:

    1. Rebecca Williams, 2017. "Business cycle review: 2008 to present day," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 80, pages 1-22, March.
    2. Buckle, Robert A., 2018. "Thirty years of inflation targeting in New Zealand: The origins, evolution and influence of a monetary policy innovation," Working Paper Series 20927, Victoria University of Wellington, Chair in Public Finance.
    3. Sarah Drought & Roger Perry & Adam Richardson, 2018. "Aspects of implementing unconventional monetary policy in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 81, pages 1-22, May.
    4. Luis Ceballos & Jorge A. Fornero & Andrés Gatty, 2017. "Nuevas estimaciones de la tasa real neutral de Chile," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 20(3), pages 120-143, December.
    5. Michelle Lewis & C. John McDermott, 2016. "New Zealand's experience with changing its inflation target and the impact on inflation expectations," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(3), pages 343-361, September.
    6. Carrillo Julio A. & Elizondo Rocío & Rodríguez-Pérez Cid Alonso & Roldán-Peña Jessica, 2018. "What Determines the Neutral Rate of Interest in an Emerging Economy?," Working Papers 2018-22, Banco de México.
    7. Adam Richardson, 2016. "Behind the scenes of an OCR decision in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 79, pages 1-15, July.
    8. Nguyen, Luan, 2016. "Should the Reserve Bank worry about the exchange rate?," MPRA Paper 75519, University Library of Munich, Germany.

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