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The contribution of foreign borrowing to the New Zealand economy

Author

Listed:
  • Anthony Makin
  • Wei Zhang
  • Grant Scobie

Abstract

New Zealand's persistent current account deficits and high external debt level remain central to ongoing economic policy debate. However, what is often overlooked is the potentially positive macroeconomic contribution made by foreign finance. This paper suggests that foreign capital inflows, the counterpart of current account deficits, have in fact made a significant contribution to New Zealand national income from a growth accounting perspective. A stylised national balance sheet that includes New Zealand's assets and foreign liabilities also places the stock of foreign debt in proper context and reveals that national wealth gains have been significant as well.

Suggested Citation

  • Anthony Makin & Wei Zhang & Grant Scobie, 2009. "The contribution of foreign borrowing to the New Zealand economy," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(3), pages 263-278.
  • Handle: RePEc:taf:nzecpp:v:43:y:2009:i:3:p:263-278
    DOI: 10.1080/00779950903308786
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Miles Workman, 2015. "Estimating the Cyclically- and Absorption-adjusted Fiscal Balance for New Zealand," Treasury Working Paper Series 15/09, New Zealand Treasury.
    3. Julie Fry, 2014. "Migration and Macroeconomic Performance in New Zealand: Theory and Evidence," Treasury Working Paper Series 14/10, New Zealand Treasury.

    More about this item

    Keywords

    foreign borrowing; national income; national wealth;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General

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