Estimating New Zealand's Structural Budget Balance
AbstractExisting methodologies for estimating a government’s structural budget balance are reviewed and applied to the case of New Zealand. Besides the conventional cyclical adjustment, an assessment is made of other possible non-structural elements to the budgetary position, including the terms of trade, asset prices and unbalanced growth. A key result is that the terms-of-trade boom, which began in the late 2000s, is associated with around 1% of GDP in tax revenues that may not be structural. Uncertainty surrounding cyclically-adjusted balance estimates is presented using fan charts.
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Bibliographic InfoPaper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 10/08.
Date of creation: Nov 2010
Date of revision:
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fiscal policy; business cycle; terms of trade; asset prices;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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- Emmanuel De Veirman & Ashley Dunstan, 2008. "How do Housing Wealth, Financial Wealth and Consumption Interact? Evidence from New Zealand," Reserve Bank of New Zealand Discussion Paper Series DP2008/05, Reserve Bank of New Zealand.
- Philip R. Lane, 2013. "External imbalances and macroeconomic policy," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(1), pages 53-70, April.
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- Oscar Parkyn & Tugrul Vehbi, 2013.
"The Effects of Fiscal Policy in New Zealand: Evidence from a VAR Model with Debt Constraints,"
CAMA Working Papers
2013-04, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Oscar Parkyn & Tugrul Vehbi, 2013. "The Effects of Fiscal Policy in New Zealand: Evidence from a VAR Model with Debt Constraints," Treasury Working Paper Series 13/02, New Zealand Treasury.
- Bruce White, 2013. "Macroeconomic Policy in New Zealand: From the Great Inflation to the Global Financial Crisis," Treasury Working Paper Series 13/30, New Zealand Treasury.
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