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New Zealand Households and the 2008/09 Recession

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Abstract

This paper seeks to quantify how the welfare of different types of household changed between 2006/07 and 2009/10; a period which included the 2008/09 recession. We use three measures of household welfare: income, expenditure and the equivalent variation metric. The equivalent variation is a measure of the welfare lost owing to price changes. Using household level data from the Household Economic Survey (HES), we allocate households into “types” on one dimension (for example age group) as is traditional in the literature but also cluster the data into 12 different representative households based on 9 demographic and economic dimensions. Households in low income groups, with children and/or who rent were particularly impacted by the recession in terms of welfare losses owing to price changes. However we find that those in low income groups had strong increases in expenditure; furthermore the welfare gains from this increased expenditure more than offset the welfare losses from the price changes.

Suggested Citation

  • Christopher Ball & Michael Ryan, 2013. "New Zealand Households and the 2008/09 Recession," Treasury Working Paper Series 13/05, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:13/05
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    File URL: https://treasury.govt.nz/sites/default/files/2013-03/twp13-05.pdf
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    References listed on IDEAS

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    1. John Creedy, 1998. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 137-151, June.
    2. Mark Smith, 2007. "Microeconomic analysis of household expenditures and their relationship with house prices," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, December.
    3. repec:bla:ausecr:v:37:y:2004:i:4:p:454-464 is not listed on IDEAS
    4. repec:bla:ausecp:v:37:y:1998:i:2:p:137-51 is not listed on IDEAS
    5. John Creedy & Cath Sleeman, 2006. "The Distributional Effects of Indirect Taxes," Books, Edward Elgar Publishing, number 12558, March.
    6. Deaton, Angus, 1974. "A Reconsideration of the Empirical Implications of Additive Preferences," Economic Journal, Royal Economic Society, vol. 84(334), pages 338-348, June.
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    Cited by:

    1. David Chamberlain & Andrea Kutinova Menclova, 2015. "The effects of unemployment rate fluctuations on private health insurance coverage in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(2), pages 157-170, August.
    2. Christopher Ball & John Creedy & Michael Ryan, 2016. "Food expenditure and GST in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(2), pages 115-128, August.

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    More about this item

    Keywords

    Consumer; Welfare; Quantitative Methods;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D6 - Microeconomics - - Welfare Economics
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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