Extending the Reserve Bank’s macroeconomic balance model of the exchange rate

James Graham and Daan Steenkamp

No AN2012/08, Reserve Bank of New Zealand Analytical Notes series from Reserve Bank of New Zealand

Abstract: The exchange rate matters a lot in New Zealand and the Reserve Bank uses several different models, each imprecise, to analyse it. This note focuses on just one of those approaches: the macro-balance model of the exchange rate. We use that model to estimate the exchange rate which, if sustained, would stabilise at around current levels the negative net international investment position (as a percentage of GDP). The sensitivity of the model estimates to some of the key assumptions is illustrated.

Pages: 17 p.
Date: 2012-10
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (5)

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