Template-Type: ReDIF-Paper 1.0
Author-Name: Viv Hall
Author-X-Name-First: Viv
Author-X-Name-Last: Hall
Author-Email: viv.hall@vuw.ac.nz
Author-Workplace-Name: Victoria University of Wellington
Author-Name: Angela Huang
Author-X-Name-First: Angela
Author-X-Name-Last: Huang
Author-Email: huanga@rbnz.govt.nz
Author-Workplace-Name: Reserve Bank of New Zealand
Title: Would Adopting the US Dollar Have Led to Improved Inflation, Output and Trade Balances for New Zealand in the 1990s?
Abstract: Deterministic simulations with the Reserve Bank of New Zealand's core FPS model show how New Zealand's broad macroeconomic environment might have evolved over the 1990s, if a US nominal yield curve and US TWI exchange rate movements under a common currency arrangement had been experienced.
Relatively looser monetary conditions would have prevailed, and led to modest short-run output gains, greater excess demand pressures, noticeably higher CPI inflation rates over the whole of the 1990s, and less favourable trade balance outcomes, especially for the late 1990s.
These macroeconomic outcomes are overall less favourable than those obtained from simulating the equivalent Australian monetary conditions.
Length: 17 pages
Creation-Date:  2003-09
File-URL: https://motu-www.motu.org.nz/wpapers/03_14.pdf
Number: 03_14
Classification-JEL: E58; F36; E31; E37; E17
Keywords: Common currency; monetary policy; deterministic simulation; New Zealand; Australia; United States
Handle: RePEc:mtu:wpaper:03_14