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The Potential Contribution of Fiscal Policy to Rebalancing and Growth in New Zealand

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  • Mr. Werner Schule

Abstract

Simulations with the Fund’s GIMF model show that raising government savings in New Zealand permanently by 1 percent of GDP is likely to improve the current account balance by about ½ percent of GDP. The way government savings are achieved matters for GDP but little for the current account. However, results are sensitive to changes in the risk premium. Fiscally neutral changes in taxes and expenditures can raise output in the long run.

Suggested Citation

  • Mr. Werner Schule, 2010. "The Potential Contribution of Fiscal Policy to Rebalancing and Growth in New Zealand," IMF Working Papers 2010/128, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2010/128
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    References listed on IDEAS

    as
    1. Mr. Alexander Plekhanov & Mr. Manmohan S. Kumar & Mr. Daniel Leigh, 2007. "Fiscal Adjustments: Determinants and Macroeconomic Consequences," IMF Working Papers 2007/178, International Monetary Fund.
    2. Kumhof, Michael & Laxton, Douglas, 2013. "Fiscal deficits and current account deficits," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2062-2082.
    3. Mr. Douglas Laxton & Susanna Mursula & Mr. Michael Kumhof & Mr. Dirk V Muir, 2010. "The Global Integrated Monetary and Fiscal Model (GIMF) – Theoretical Structure," IMF Working Papers 2010/034, International Monetary Fund.
    4. Matthew Bell & Gary Blick & Oscar Parkyn & Paul Rodway & Polly Vowles, 2010. "Challenges and Choices: Modelling New Zealand’s Long-term Fiscal Position," Treasury Working Paper Series 10/01, New Zealand Treasury.
    5. Sebastian Edwards, 2006. "External Imbalances in an Advanced, Commodity-Exporting Country: The Case of New Zealand," NBER Working Papers 12620, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Takuji Komatsuzaki, 2019. "Improving Public Infrastructure in the Philippines," Asian Development Review, MIT Press, vol. 36(2), pages 159-184, September.
    2. Ding Ding & Mr. Werner Schule & Ms. Yan M Sun, 2014. "Cross-Country Experience in Reducing Net Foreign Liabilities: Lessons for New Zealand," IMF Working Papers 2014/062, International Monetary Fund.
    3. International Monetary Fund, 2011. "Australia: Selected Issues," IMF Staff Country Reports 2011/301, International Monetary Fund.

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