Factor income shares, the banking sector, the exchange rate, and the New Zealand current account deficit
The clean float of the New Zealand exchange rate exposes financial institutions to potentially undesired volatility of the nominal exchange rate. In the New Zealand exchange-rate adjustment process of 1998-2000 the data seem consistent with the idea that, intentionally or unintentionally, the behaviour of the overseas-owned trading banks amounted to management of the exchange rate (support for the Kiwi) during the adjustment period from 1998 to 2000. Whether this represented the exercise of market power in a coordinated fashion, or was simply a natural decentralised response to market incentives facing the banks, is not clear. The paper suggests that in the absence of large volumes of short-term credit advanced by overseas parents to their New Zealand bank affiliates, the nominal exchange rate would have been under far greater downward pressure during 1998-99, and the economy might have faced a classic financial and exchange-rate crisis in the wake of the Asian meltdown.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 36 (2002)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RNZP20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RNZP20|
When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:36:y:2002:i:2:p:177-198. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.