{
  "title": "New Zealand: Selected Issues",
  "publication": "IMF Staff Country Reports, May 14, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/05/14/new-zealand-selected-issues-548968",
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  "summary": "This Selected Issues paper investigates why New Zealand’s inflation is higher and further from target than comparator economies considering two main hypotheses: (1) the persistence of pandemic era shocks, and (2) strong migration inflows fuelling demand.",
  "sections": [
    {
      "heading": "Research questions and hypotheses",
      "content": "- Investigates why New Zealand’s inflation is higher and further from target than comparator economies.\n- Tests two main hypotheses:\n  - (1) the persistence of pandemic era shocks;\n  - (2) strong migration inflows fuelling demand."
    },
    {
      "heading": "Identified drivers of higher inflation",
      "content": "- Common drivers across many advanced economies:\n  - expansionary fiscal and monetary policy;\n  - high global commodity prices;\n  - exchange rates;\n  - high maritime transport costs.\n- New Zealand-specific factor:\n  - the delayed reopening of the economy likely caused a postponed demand shock relative to similar economies.\n- Dynamics:\n  - results show that the impact of these shocks decay rapidly over time, suggesting positive short-term inflation dynamics."
    },
    {
      "heading": "Migration: short-run effects",
      "content": "- Large migration waves are associated with short-run increases in inflation.\n- Magnitude and persistence:\n  - these inflationary effects are relatively modest;\n  - these effects are no longer significant after four years."
    },
    {
      "heading": "Migration: long-run effects",
      "content": "- Long-run dynamics show evidence that migration can lead to significant long-term gains to:\n  - productivity;\n  - output;\n  - capital growth."
    },
    {
      "heading": "Interaction with labor market conditions",
      "content": "- Countries with tight labor markets exhibit similar patterns to those without tight labor markets.\n- Difference in timing:\n  - in tight labor markets, the inflationary effects of migration dissipate faster.\n\nSource: New Zealand: Selected Issues, IMF Staff Country Reports No. 2024/123, May 14, 2024.\n\n---\n\n Content in this bundle\n\n- New Zealand: Selected Issues; IMF Country Report No. 24/123; April 23, 2024\n  - New Zealand: Selected Issues; IMF Country Report No. 24/123; April 23, 2024 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - New Zealand: Selected Issues; IMF Country Report No. 24/123; April 23, 2024 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "[Markdown version](/en/publications/cr/issues/2024/05/14/new-zealand-selected-issues-548968/index.md)",
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    "Published: May 14, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400275302.002",
    "Investigates why New Zealand’s inflation is higher and further from target than comparator economies.",
    "Tests two main hypotheses:",
    "Common drivers across many advanced economies:",
    "New Zealand-specific factor:",
    "Dynamics:",
    "Large migration waves are associated with short-run increases in inflation.",
    "Magnitude and persistence:",
    "Long-run dynamics show evidence that migration can lead to significant long-term gains to:",
    "Countries with tight labor markets exhibit similar patterns to those without tight labor markets.",
    "Difference in timing:",
    "**New Zealand: Selected Issues; IMF Country Report No. 24/123; April 23, 2024**"
  ],
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      "title": "New Zealand: Selected Issues; IMF Country Report No. 24/123; April 23, 2024",
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