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Accounting for Growth and Output Gaps: Evidence from New Zealand

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  • Kevin J. Fox
  • Ulrich Kohli
  • Ronald S. Warren Jr.

Abstract

We evaluate New Zealand’s macroeconomic performance over the 1967–1996 period, which witnessed numerous economic reforms. Using both index–number and econometric techniques, we decompose nominal GDP growth and the output gap into contributions from price level changes, productivity growth and changes in factor utilisation. Changes in domestic prices accounted for four–fifths of the growth in nominal GDP, while capital accumulation and employment growth were the most important factors determining real–output growth. Deviations in the domestic price level around its long–run trend contributed most heavily to changes in the nominal output gap. The real gap was influenced in any year variously by deviations of the terms of trade and labour input from their long–run trends, as well as by productivity shocks.

Suggested Citation

  • Kevin J. Fox & Ulrich Kohli & Ronald S. Warren Jr., 2002. "Accounting for Growth and Output Gaps: Evidence from New Zealand," The Economic Record, The Economic Society of Australia, vol. 78(242), pages 312-326, September.
    • Handle: RePEc:bla:ecorec:v:78:y:2002:i:242:p:312-326
    DOI: 10.1111/1475-4932.00060
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    Cited by:

    1. Cardi, Olivier, 2007. "Another View Of The J-Curve," Macroeconomic Dynamics, Cambridge University Press, vol. 11(2), pages 153-174, April.
    2. Fox, Kevin J. & Grafton, R. Quentin & Kompas, Tom & Che, Tuong Nhu, 2006. "Capacity reduction, quota trading and productivity: the case of a fishery," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(2), pages 1-18, June.
    3. Meier, Carsten-Patrick, 2004. "Investigating the impact of an appreciation of the euro in a small macroeconometric model of Germany and the euro area," Kiel Working Papers 1204, Kiel Institute for the World Economy (IfW Kiel).
    4. Ryan Macdonald, 2010. "Real Gross Domestic Income, Relative Prices, And Economic Performance Across The Oecd," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 498-518, September.
    5. Gern, Klaus-Jürgen & Kamps, Christophe & Meier, Carsten-Patrick & Scheide, Joachim, 2004. "Verhaltener Aufschwung in Euroland," Open Access Publications from Kiel Institute for the World Economy 3215, Kiel Institute for the World Economy (IfW Kiel).
    6. CARDI, Oliver & BERTINELLI, Luisito, 2004. "A formal model of krugman’s intuition on the J-curve," LIDAM Discussion Papers CORE 2004043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Ulrich Kohli, 2022. "Trading Gains and Productivity: A Törnqvist Approach," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 63-86, Spring.
    8. Ulrich Kohli, 2003. "Terms of trade, real GDP, and real value added: A new look at New Zealand's growth performance," New Zealand Economic Papers, Taylor & Francis Journals, vol. 37(1), pages 41-66.
    9. Fox, Kevin J. & Grafton, R. Quentin & Kirkley, James & Squires, Dale, 2003. "Property rights in a fishery: regulatory change and firm performance," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 156-177, July.
    10. Kevin J Fox, 2005. "Returns to Scale, Technical Progress and Total Factor Productivity Growth in New Zealand Industries," Treasury Working Paper Series 05/04, New Zealand Treasury.
    11. Gern, Klaus-Jürgen & Kamps, Christophe & Meier, Carsten-Patrick & Scheide, Joachim, 2004. "Moderate upswing in Euroland," Kiel Discussion Papers 410, Kiel Institute for the World Economy (IfW Kiel).

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