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

Author/Editor: Schule, Werner
Publication Date: May 01, 2010
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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.
Series: Working Paper No. 10/128
Subject(s): Current account balances | Current account deficits | Economic models | Fiscal policy | Government expenditures | New Zealand | Public sector savings | Tax reforms

Author's Keyword(s): Public savings | current account | tax and expenditure reform
Publication Date: May 01, 2010
Format: Paper
Stock No: WPIEA2010128 Pages: 24
US$18.00 (Academic Rate:
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