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.