Automatic Fiscal Stabilisers: Implications for New Zealand
AbstractAutomatic fiscal stabilisers, or the cyclical components of the budget balance, are larger in New Zealand than in the average OECD country, reflecting both higher sensitivity to the conomic cycle, and a more volatile cycle. Fiscal vigilance is especially important in New Zealand. Large projected operating surpluses could easily disappear if lower economic outcomes are mistakenly assumed to be cyclical. But, automatic stabilisers are difficult to use in a policy framework as empirical estimates of the cyclical budget balance vary significantly. While the estimated trend in automatic stabilisers is broadly similar, the level varies significantly, such that at any point in time a 'structural surplus' may be dependant on the estimation method.
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Bibliographic InfoPaper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 01/10.
Length: 25 pages
Date of creation: 2000
Date of revision: 2001
Note: An earlier draft of this paper was prepared by Julie Tam in 2000, and has been updated by Heather Kirkham.
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automatic fiscal stabilisers; economic cycle; cyclical budget balance; expenditure and tax elasticities;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-09-26 (All new papers)
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