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Business cycle review, 1998-2011

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This article analyses New Zealand’s economic expansion from 1998 to 2007, the contraction that followed in 2008-09, and the gradual recovery thereafter. The expansion was long and large by the country’s post-war standards, while the contraction was marginally longer but shallower than the norm. An important driver of the expansion was a long and sustained rise in the terms of trade, in part reflecting expansion in the Asian region, especially China. A sharp rise in net immigration early in the period, a marked increase in the use of credit funded from offshore, and rising government spending were also important influences. The strong New Zealand dollar was another important factor, eroding competitiveness in parts of the tradables-producing sector and helping fuel demand for non-tradable goods and services. Balance sheets of households, farms and businesses became increasingly stretched over the period, a factor that has dampened the speed of recovery over the past three years.

Suggested Citation

  • Willy Chetwin, 2012. "Business cycle review, 1998-2011," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 75, pages 14-27, March.
  • Handle: RePEc:nzb:nzbbul:mar2012:3
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    File URL: http://rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2012/2012mar75-1chetwin.pdf
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    References listed on IDEAS

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    1. Emmanuel De Veirman & Michael Reddell, 2011. "Towards understanding what and when households spent," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 74, pages 1-11, December.
    2. David Archer & Andy Brookes & Michael Reddell, 1999. "A cash rate system for implementing monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 62, March.
    3. Hall, Viv B. & McDermott, C. John, 2009. "The New Zealand Business Cycle," Econometric Theory, Cambridge University Press, vol. 25(04), pages 1050-1069, August.
    4. Anne-Marie Brook & Sean Collins & Christie Smith, 1998. "The 1991-97 business cycle in review," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, December.
    5. 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.
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    Cited by:

    1. Willy Chetwin & Tim Ng & Daan Steenkamp, 2013. "New Zealand’s short- and medium-term real exchange rate volatility: drivers and policy implications," Reserve Bank of New Zealand Analytical Notes series AN2013/03, Reserve Bank of New Zealand.
    2. Jeff Borland, 2014. "Recent Unemployment Experience in New Zealand," Treasury Working Paper Series 14/01, New Zealand Treasury.
    3. Chris Hunt, 2013. "The last financial crisis and the case for macro-prudential intervention," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 3-16, June.
    4. 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.

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