This article provides an update on the ongoing debate as to whether New Zealand should enter into a currency union with Australia. While the decision to adopt a common currency would ultimately be a political one, assessing the specific economic costs and benefits is important for informed...

In clause 2(b) of the Policy Targets Agreement (PTA) between the Minister of Finance and Governor of the Reserve Bank, the target used to direct the Reserve Bank's pursuit of price stability is expressed as "future CPI inflation outcomes between 1 per cent and 3 per cent on average over the...

Aggregate debt of the New Zealand household sector increased from 110 percent of household incomes in 2000 to a peak of 175 percent in 2008, and currently stands at 165 percent. The increase was large and historically unprecedented, but not exceptional compared to other countries' experience...

Last year the Reserve Bank concluded a review of its foreign exchange intervention policy. The review resulted in a recommendation to the Government that the Bank be given the capacity to broaden the objectives of foreign exchange intervention towards helping the Governor achieve monetary policy...

The changing interaction between economic and financial developments around the world is prompting lively debate in the academic and central banking community about the use of money and credit measures in contemporary monetary policy formulation. Currently, money and credit measures generally...

This article examines ‘systemic’ banking crises in New Zealand. While there are examples of individual institutional failures in New Zealand’s early colonial development for example, there are only two episodes that have involved a significant erosion of banking system capital – our...

This article examines the concept of financial system efficiency in the New Zealand context. The primary function of the financial system is to facilitate the allocation of society’s scarce resources, both across the economic system and over time, in an environment of inherent uncertainty. If...

This article takes a look back at the last financial cycle that occurred over the previous decade – a cycle that contributed to one of the longest periods of uninterrupted economic growth in New Zealand for the past 60 years. It conducts a counterfactual exercise that maps the Reserve Bank’s...

Since August 2007, the global economy has been subject to a sharp and adverse financial shock, with re-pricing of risk and higher cost of funds. This article argues that this shock is a consequence of an unsustainable period of global economic growth involving very large external imbalances....

The integration of emerging markets such as China into the global economy has had a profound effect on the inflation process in advanced economies. This article examines the relationship between the integration of emerging Asia into the global economy and the inflation process in New Zealand,...