New Zealand's terms of trade have risen by 30 per cent in the last decade, raising national income by about 9 per cent. This note explores some of the economic consequences of the higher terms of trade.

Exchange rate changes affect prices in New Zealand. Using data from the last 25 years, this note illustrates how the inflation responses have differed depending on what caused the exchange rate to move.

This paper estimates a counterfactual scenario of what might have happened to housing market indicators since late 2013 if the LVR restriction had not been implemented. House prices and credit growth have been weaker than suggested by that counterfactual model.

Imports make up a substantial proportion of what New Zealanders' spend, both directly, and through the imported inputs used in goods and services produced locally. This note uses input-output tables to estimate the total share of imports in the expenditure bases that lie behind two measures of...

Connections between short-term fluctuations in one country's economic activity and those in the rest of world received renewed focus after the 2008/09 recession. This paper examines some of those connections using several statistical techniques.

The Taylor Rule is often used to describe simply how central banks adjust short-term interest rates in response to economic conditions. We use this approach to analyse monetary policy in New Zealand, Australia, and the United States since the early 1990s. We find that the response of monetary...

The Balassa-Samuelson hypothesis suggests that countries with a weak relative productivity performance should, over time, see a low or falling real exchange rate. This note uses detailed sectoral data to test the hypothesis over the period 1978-2006 and also fails to find any evidence of the...

Some simple cross-country comparisons of exchange rate volatility are presented, suggesting that New Zealand's exchange rate has been more volatile than those of many of its peers. The note also discusses possible reasons for the volatility, and possible policy responses

The Reserve Bank recently imposed a loan-to-value ratio limit governing bank lending on residential mortgages. This note outlines the analysis undertaken to estimate the likely impact of this limit on several macro-economically significant variables.

Macroeconomics makes extensive use of concepts for which there are no observed data. Empirical estimates of such unobservable variables - core inflation is one example - have to be estimated from observed data. The data decomposition tool helps identify the contribution of each piece of observed...