Reserve Bank of New Zealand Bulletin articles – March 2009
All articles are in Adobe Acrobat PDF format. You can download the free Acrobat PDF reader from the Adobe website.
Editor’s Note (PDF 83KB)
Financial vulnerability of mortgage-indebted households in New Zealand - evidence from the Household Economic Survey (PDF 118KB)
Aggregate household debt more than doubled between 2001 and 2008, alongside similarly rapid increases in house prices. Aggregate data, however, cannot tell us which types of households – by income and assets – have built up the most debt over the period, which is important for assessing their financial vulnerability. This article uses information from the Household Economic Surveys (HES) for 2001, 2004 and 2007 to provide some evidence on this issue. The survey evidence suggests that, overall, financial vulnerability in the household sector did not greatly increase over the period of strong house price rises this decade. Simple modelling suggests that some households would, however, be vulnerable to simultaneous large shocks to house values, interest rates and employment.
Thinking about more than one thing at a time: Eric Leeper on monetary and fiscal policy interactions (PDF 89KB)
Eric Leeper, Professor of Economics at Indiana University, visited New
Zealand in October and November 2008 as part of the Professorial Fellowship in
Monetary and Financial Economics sponsored by the Reserve Bank of New Zealand
and Victoria University of Wellington.1 Professor Leeper is also a director of
the Centre for Applied Economics and Policy Research at Indiana University, a
Research Associate at the US National Bureau of Economic Research, and an
External Advisor to the Sveriges Riksbank (the Swedish central bank), and has
been a visiting scholar at the Federal Reserve Board.
His extensive publications and expertise cover monetary theory and policy, and interactions between monetary and fiscal policy. In this interview, he talks about how fiscal policy could be improved, the roles of fiscal and monetary policy in stabilising the economy, and some current challenges for fiscal and monetary policy-makers.
Recent trends and developments in currency (PDF 131KB)
This article reviews trends in the use of currency in New Zealand and reports developments of particular interest. The value of currency in circulation continues to grow, but there was an unusual increase in high-denomination notes late in 2008, associated with public nervousness about the state of the financial sector. Our review of the quality of one denomination of banknotes in circulation suggests that they meet our high quality standards, and our checking of the authenticity of bank notes indicates that the rate of counterfeiting is very low by international standards. Finally, coin issuance continues at high rates, most likely as the public are still filling stores of coins at home.
In December 2008, jointly with the Bank for International Settlements, the Reserve Bank hosted a workshop entitled “Nowcasting with Model Combination”. This workshop was an opportunity for central bank practitioners and local and offshore academics to discuss recent technical advances in how to combine models for ‘nowcasting’ – the forecasting of current or near-term economic conditions. This note provides an overview of some themes that emerged from the workshop. Full papers are available from http://www.rbnz.govt.nz/research/workshops/december2008/3421588.html.
This article reproduces the paper for a speech given by Governor Alan Bollard on 30 January 2009 to the Canterbury Employers’ Chamber of Commerce, Christchurch, New Zealand. It discusses the causes and consequences of the credit boom this decade in developed Western economies, the policy actions taken in response in New Zealand and offshore, and the road ahead.
The views expressed are those of individual authors and do not necessarily reflect official positions of the Reserve Bank of New Zealand. Articles published in this Bulletin may not be wholly or substantially reproduced without the permission of the Reserve Bank of New Zealand. Data, brief extracts from articles, and other material appearing in the Bulletin, may be used without restriction provided due acknowledgement is made of the source.