The Potential Contribution of Fiscal Policy to Rebalancing and Growth in New Zealand

May 1, 2010

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Format: Chicago

Werner Schule. The Potential Contribution of Fiscal Policy to Rebalancing and Growth in New Zealand, (USA: International Monetary Fund, 2010) accessed December 26, 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

Simulations with the Fund’s GIMF model show that raising government savings in New Zealand permanently by 1 percent of GDP is likely to improve the current account balance by about ½ percent of GDP. The way government savings are achieved matters for GDP but little for the current account. However, results are sensitive to changes in the risk premium. Fiscally neutral changes in taxes and expenditures can raise output in the long run.

Subject: Consumption, Expenditure, Government consumption, Income, National accounts, Return on investment

Keywords: CA ratio, Capital, Consumption, Current account, Deficit, GDP, GDP gain, Global, Government consumption, Government consumption spending, Government saving, Income, Persistent current account deficit, Public savings, Return on investment, Risk premium, Saving, Tax and expenditure reform, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/128
Stock No:

WPIEA2010128
ISBN:

9781455200870
ISSN:

1018-5941

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