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Making fiscal policy more stabilising in the next upturn: Challenges and policy options

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  • Anne-Marie Brook

Abstract

While New Zealand's fiscal framework has been relatively successful overall, this paper suggests that it gives insufficient emphasis to macro stabilisation during upturns in the business cycle, especially once the debt target has been met. Options for making fiscal policy ‘more stabilising’ in future economic upturns include: revising the Public Finance Act so as to increase the importance that is placed on avoiding pro-cyclical fiscal policy; more focus on sticking to ex-ante spending plans; or a stabilisation fund to safeguard revenue windfalls until the following downturn. The potential role of an independent fiscal council is also touched upon.

Suggested Citation

  • Anne-Marie Brook, 2013. "Making fiscal policy more stabilising in the next upturn: Challenges and policy options," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(1), pages 71-94, April.
  • Handle: RePEc:taf:nzecpp:vv:47:y:2013:i:1:p:71-94
    DOI: 10.1080/00779954.2012.721691
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    References listed on IDEAS

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    1. Philip Lane, 2010. "Some Lessons for Fiscal Policy from the Financial Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp334, IIIS.
    2. Boyce, Gordon, 2007. "Innovation + Independence: The Reserve Bank of New Zealand, 1973–2002. By John Singleton with Arthur Grimes, Gary Hawke, and Frank Holmes. Auckland: University of Auckland Press, 2006. xii + 340 pp.," Business History Review, Cambridge University Press, vol. 81(1), pages 204-206, April.
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    Cited by:

    1. Rebecca Williams, 2017. "Characterising the current economic expansion: 2009 to present day," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 80, pages 1-22, June.
    2. Robert A Buckle & Amy A Cruickshank, 2013. "The Requirements for Long-Run Fiscal Sustainability," Treasury Working Paper Series 13/20, New Zealand Treasury.
    3. Lees, Kirdan, 2013. "Fighting fit? Assessing New Zealand’s fiscal sustainability," NZIER Working Paper 2013/5, New Zealand Institute of Economic Research.

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