Introducing K.I.T.T. – The Reserve Bank’s DSGE model for forecasting and policy analysis

At the core of the Reserve Bank's forecasting process is a dynamic stochastic general equilibrium (DSGE) model called the Kiwi Inflation Targeting Technology (KITT) model.  The KITT model was introduced into the Bank in 2009, replacing the Forecasting and Policy System (FPS) model. The KITT model is used to help formulate the Bank's economic projections, and can also be used in a variety of research applications.

Introduction

Introducing KITT: The Reserve Bank of New Zealand new DSGE model for forecasting and policy design (PDF 322KB)
Author: Kirdan Lees
This bulletin article provides a non-technical overview of the Reserve Bank of New Zealand's KITT model.

KITT documentation

K.I.T.T.: Kiwi Inflation Targeting Technology (PDF 914KB)
Authors: Jaromír Beneš, Andrew Binning, Martin Fukač, Kirdan Lees, Troy Matheson
This book details KITT (Kiwi Inflation Targeting Technology) the Reserve Bank of New Zealand’s new DSGE model for use as the core forecasting and policy model. The guide describes how the macroeconomic structure of the model is derived from a consistent set of assumptions regarding the micro-founded interactions between firms, households and other agents in the model.

KITT Book Equations Derivation (PDF 263KB)
Author: Andrew Binning
This file provides material that assists with deriving the key equations within the KITT model.

KITT related research

Swine flu: what are the impacts on the New Zealand economy — a macro-modelling approach (PDF 207KB)
Authors: Martin Fukač and Kirdan Lees
We adopt a macro-economic modelling approach to estimating the potential impact of swine flu on the New Zealand economy. In particular, we use consumption and labour shocks to mimic the initial impact of the virus and use the Reserve Bank's new KITT model to model the dynamics of the shock transmission.