Potential Growth of Australia and New Zealand in the Aftermath of the Global Crisis

May 1, 2010

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Format: Chicago

Yan M Sun. Potential Growth of Australia and New Zealand in the Aftermath of the Global Crisis, (USA: International Monetary Fund, 2010) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Using a production function method, this paper assesses the impact of the global crisis on the potential growth of Australia and New Zealand. The two countries have not been hit hard by the global crisis, but have large net external liabilities. The paper finds that the main negative impact of the global crisis is likely to come through higher costs of capital, offset partly by a higher return to capital from strong demand for commodities by emerging Asia. It estimates medium-term potential growth of about 3 percent for Australia and 2. percent for New Zealand, higher than that of many other advanced economies.

Subject: Capacity utilization, Labor, Labor force participation, Potential output, Total factor productivity

Keywords: Australia, Capital, Cost of capital, Equilibrium capital-output ratio, Investment, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/127
Stock No:

WPIEA2010127
ISBN:

9781455200863
ISSN:

1018-5941

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