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.

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

We estimate a Factor Augmented Vector autoregression (FAVAR) to identify idiosyncratic exchange rate shocks and examine the effects of these shocks on different sectors of the economy. We find that an unexpected shock to the exchange rate has significant effects on the tradable sector of the...

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 Reserve Bank maintains a range of exchange rate indices which summarise developments in the New Zealand dollar, by aggregating various bilateral exchange rates that are relevant to New Zealand’s economy. In this article, we review some of the issues involved in doing this aggregation. From...

The terms of trade are a key influence on New Zealand’s economy, and have often been quite volatile. This article compares New Zealand’s experience with those of a group of other advanced economies. Cycles in New Zealand’s terms of trade have been relatively large, but similar to those in...

We estimate a Factor Augmented Vector autoregression (FAVAR) to identify idiosyncratic exchange rate shocks and examine the effects of these shocks on different sectors of the economy. We find that an unexpected shock to the exchange rate has significant effects on the tradable sector of the...

New Zealand’s current account deficit is the counterpart of a low rate of national saving relative to domestic investment. Persistent current account deficits have led to the build-up of a large net international investment position (NIIP) financed largely through foreign debt with short...

In late 2010 and in 2011, Canterbury endured a series of major earthquakes. Overall, the Canterbury economy has been reasonably resilient to the impact of the earthquakes, and the spillover to other regions in New Zealand has been limited. Goods exports and manufacturing activity appear to have...