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

Author/Editor: Sun, Yan
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: 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.
Series: Working Paper No. 10/127
Subject(s): Australia | Capital | Economic growth | Financial crisis | Global Financial Crisis 2008-2009 | Investment | Labor | New Zealand | Production growth | Productivity | Unemployment

Author's Keyword(s): Potential growth | TFP | financial crisis | cost of capital
Publication Date: May 01, 2010
Format: Paper
Stock No: WPIEA2010127 Pages: 22
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