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Macroeconomic Policy in New Zealand: From the Great Inflation to the Global Financial Crisis

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Abstract

This paper surveys the evolution of macroeconomic policy, in the New Zealand context, from the beginning of the end of the Great Inflation of the 1970s/1980s, through to the current recovery from the Great Recession brought on by the Global Financial Crisis. The 30 or so years since the late 1970s is divided into four periods: the run-up to the mid-1984 currency crisis; the period of reform from that point until the early 1990s; the subsequent extended period of non-inflationary growth in the 1990s and into the 2000s (punctuated by the Asian Financial Crisis in 1997/98); and the GFC and the years since. The paper reviews macroeconomic policy and developments across each of these periods in relation to fiscal policy, monetary policy, exchange rate policy and prudential supervision, all of which at various times have been used with macroeconomic objectives in mind. The paper concludes with some observations on where macro policy appears to be headed, suggesting that is towards achieving some re-integration of its individual components.

Suggested Citation

  • Bruce White, 2013. "Macroeconomic Policy in New Zealand: From the Great Inflation to the Global Financial Crisis," Treasury Working Paper Series 13/30, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:13/30
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    File URL: https://treasury.govt.nz/sites/default/files/2013-12/twp13-30.pdf
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    References listed on IDEAS

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    1. Oscar Parkyn, 2010. "Estimating New Zealand's Structural Budget Balance," Treasury Working Paper Series 10/08, New Zealand Treasury.
    2. Enzo Cassino & Michelle Lewis, 2012. "Currency intervention - the profitability of some recent international experiences," Reserve Bank of New Zealand Analytical Notes series AN2012/03, Reserve Bank of New Zealand.
    3. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-190, March.
    4. 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.
    5. David Drage & Anella Munro & Cath Sleeman, 2005. "An update on Eurokiwi and Uridashi bonds," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 68, September.
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    Cited by:

    1. Dhritidyuti Bose & Renee Philip & Richard Sullivan, 2016. "Returning to Surplus: New Zealand's Post-GFC Fiscal Consolidation Experience," Treasury Working Paper Series 16/05, New Zealand Treasury.

    More about this item

    Keywords

    Macroeconomy; fiscal policy; monetary policy; exchange rate policy; macro-prudential policy; prudential supervision;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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