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Roles of Fiscal Policy in New Zealand

Economic growth is one of the objectives of the current government. Fiscal policy, encompassing government expenditure and taxation decisions, can significantly impact on economic growth. This paper proposes a framework which views fiscal policy through three lenses and applies this approach to consider how fiscal policy affects economic growth. The three lenses are: fiscal sustainability, fiscal structure and fiscal stabilisation. The paper reviews international literature pertaining to these three lenses and discusses the extent to which these lenses are incorporated into New Zealand’s current fiscal framework. Contemporary New Zealand fiscal challenges are discussed and, in light of these challenges, the paper concludes with consideration of areas to investigate which may yield improvements to the New Zealand fiscal framework.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2008/08-02/twp08-02.pdf
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Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 08/02.

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Length: 61
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:nzt:nztwps:08/02
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  2. Barro, Robert J., 1979. "On the Determination of the Public Debt," Scholarly Articles 3451400, Harvard University Department of Economics.
  3. David Alan Aschauer, 1997. "Do States Optimize? Public Capital and Economic Growth," Macroeconomics 9711007, EconWPA.
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  5. Joaquim Oliveira Martins & Romina Boarini & Hubert Strauss & Christine de la Maisonneuve & Clarice Saadi, 2007. "The Policy Determinants of Investment in Tertiary Education," OECD Economics Department Working Papers 576, OECD Publishing.
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  9. Favero, Carlo A. & Giavazzi, Francesco, 2007. "Debt and the Effects of Fiscal Policy," CEPR Discussion Papers 6092, C.E.P.R. Discussion Papers.
  10. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD Publishing.
  11. Mark Hallerberg & Jürgen von Hagen, 1999. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 209-232 National Bureau of Economic Research, Inc.
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  14. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  15. Maria Antoinette Silgoner & Jesús Crespo-Cuaresma & Gerhard Reitschuler, 2003. "The Fiscal Smile; The Effectiveness and Limits of Fiscal Stabilizers," IMF Working Papers 03/182, International Monetary Fund.
  16. Bob Buckle & Aaron Drew, 2006. "Testing stabilisation policy limits in a small open economy: editor's summary of a macroeconomic policy forum," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 69, pages 9p, December.
  17. Alan G. Ahearne & Joseph E. Gagnon & Jane Haltmaier & Steve Kamin ... [et al.]., 2002. "Preventing deflation: lessons from Japan's experience in the 1990s," International Finance Discussion Papers 729, Board of Governors of the Federal Reserve System (U.S.).
  18. Agell, J. & Lindh, T. & Ohlsson, H., 1999. "Growth and the Public Sector: a Reply," Papers 1999:1, Uppsala - Working Paper Series.
  19. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
  20. Thomas Dalsgaard, 2001. "The Tax System in New Zealand: An Appraisal and Options for Change," OECD Economics Department Working Papers 281, OECD Publishing.
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  22. Campbell Leith & Simon Wren-Lewis, 2005. "Fiscal Stabilization Policy and Fiscal Institutions," Oxford Review of Economic Policy, Oxford University Press, vol. 21(4), pages 584-597, Winter.
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  26. Ohlsson, H. & Agell, J. & Lindh, T., 1995. "Growth and the Public Sector: A Critical Review Essay," Papers 1995-09, Uppsala - Working Paper Series.
  27. Judd, Kenneth L., 1999. "Optimal taxation and spending in general competitive growth models," Journal of Public Economics, Elsevier, vol. 71(1), pages 1-26, January.
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  29. Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
  30. Lewis Evans & Arthur Grimes & Bryce Wilkinson, 1996. "Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1856-1902, December.
  31. James P. Feehan, 2002. "Distortionary Taxation and Optimal Public Spending on Productive Activities," Economic Inquiry, Western Economic Association International, vol. 40(1), pages 60-68, January.
  32. Ashley Dunstan & David Hargreaves & Ozer Karagedikli, 2007. "The impact of fiscal policy on the business cycle," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, March.
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  34. John Creedy, 2003. "The Excess Burden of Taxation and Why it (Approximately) Quadruples When the Tax Rate Doubles," Treasury Working Paper Series 03/29, New Zealand Treasury.
  35. Roberto Perotti, 1999. "Fiscal Policy in Good Times and Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1399-1436.
  36. Florence Jaumotte & Nigel Pain, 2005. "From Ideas to Development: The Determinants of R&D and Patenting," OECD Economics Department Working Papers 457, OECD Publishing.
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