Improving the Management of the Crown’s Exposure to Risk
The paper discusses the management of the New Zealand Crown’s exposure to financial risk. It argues that the Crown’s aggregate exposure to risk can be effectively managed only centrally, and that, despite the difficulties of measuring risk and specifying an appropriate objective, the government should do more to measure, monitor, and control the Crown’s aggregate exposure to risk. The paper goes on to present a new model for quantifying the Crown’s exposure to risk, which integrates analysis of the government’s accounting assets and liabilities with analysis of projected tax revenue and government spending. Among other results, the model suggests that the annual volatility (standard deviation) of the Crown’s comprehensive balance sheet is at present approximately $30 billion.
|Date of creation:||Dec 2009|
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References listed on IDEAS
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qt61d7b4pg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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- Bohn, Henning, 1990. "Tax Smoothing with Financial Instruments," American Economic Review, American Economic Association, vol. 80(5), pages 1217-1230, December.
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- Michael Graff, 2004. "Estimates of the output gap in real time: how well have we been doing?," Reserve Bank of New Zealand Discussion Paper Series DP 2004/04, Reserve Bank of New Zealand. Full references (including those not matched with items on IDEAS)
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