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The global financial crisis and its transmission to New Zealand – an external balance sheet analysis

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  • Paul Bedford

    (Reserve Bank of New Zealand)

Abstract

Recent global events have underscored how instability in the international financial system can have a pervasive impact on the world economy. Starting in the middle of 2007, deteriorating credit quality in the US residential mortgage market served as the catalyst for a systemic financial crisis that has spread far beyond its original source, including to New Zealand. This article aims to shed light on the channels through which these global developments have affected the domestic financial system and real economy, principally by examining the scale and composition of the international assets and liabilities that comprise New Zealand’s external balance sheet.

Suggested Citation

  • Paul Bedford, 2008. "The global financial crisis and its transmission to New Zealand – an external balance sheet analysis," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, December.
  • Handle: RePEc:nzb:nzbbul:december2008:2
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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2008/2008dec71-4bedford.pdf
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    References listed on IDEAS

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    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
    2. David Drage & Anella Munro & Cath Sleeman, 2005. "An update on Eurokiwi and Uridashi bonds," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 68, September.
    3. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, pages 223-250.
    4. Charles Bean, 2007. "Globalisation and Inflation," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 8(1), pages 57-73, January.
    5. Michael Reddell & Ian Woolford & Sean Comber, 2001. "International capital flows, external debt, and New Zealand financial stability," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 64, December.
    6. Chris Hunt, 2008. "Financial turmoil and global imbalances: the end of Bretton Woods II?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, September.
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    Cited by:

    1. Eickmeier, Sandra & Ng, Tim, 2011. "Forecasting national activity using lots of international predictors: An application to New Zealand," International Journal of Forecasting, Elsevier, pages 496-511.
    2. Philip R. Lane, 2013. "External imbalances and macroeconomic policy," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(1), pages 53-70, April.
    3. Persakis, Anthony & Iatridis, George Emmanuel, 2015. "Cost of capital, audit and earnings quality under financial crisis: A global empirical investigation," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 38(C), pages 3-24.
    4. Philip R. Lane, 2011. "External Imbalances and Macroeconomic Policy in New Zealand," The Institute for International Integration Studies Discussion Paper Series iiisdp376, IIIS.
    5. Daan Steenkamp, 2010. "New Zealand’s imbalances in a cross-country context," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 73, pages 37-49, December.
    6. Ian Nield, 2008. "Evolution of the Reserve Bank’s liquidity facilities," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, December.

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