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Changes in the transmission mechanism of monetary policy in New Zealand

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Over the last few years, monetary policy in New Zealand has focused on reducing strong demand and inationary pressures. It has been commented that this task has been frustrated by a weakening of the monetary policy transmission mechanism in New Zealand. In this paper we draw upon a range of empirical models to assess whether monetary policy has lost its potency over the recent cycle, and to identify changes in the mechanism more broadly. Our main conclusion is that the overall impact of monetary policy has not obviously weakened, and in some respects has strengthened, over the past decade.

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Paper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Discussion Paper Series with number DP2008/03.

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Length: 61 p.
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:nzb:nzbdps:2008/03

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  17. Bob Buckle & Aaron Drew, 2006. "Testing stabilisation policy limits in a small open economy: editor's summary of a macroeconomic policy forum," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 69, pages 9p, December.
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