Estimating potential output for New Zealand: a structural VAR approach

Iris Claus ()

No DP2000/03, Reserve Bank of New Zealand Discussion Paper Series from Reserve Bank of New Zealand

Abstract: One of the main indicators of inflationary pressures used by the Reserve Bank of New Zealand is the output gap. A measure of potential output is obtained using a structural vector autoregression (SVAR) methodology. The assumption that movements in output are the result of cyclical shocks arising from demand-side developments, and productivity shocks arising from supply-side developments provides a set of identifying restrictions. Prior to the reforms, the New Zealand economy was in excess demand with a more prolonged and deeper recession in the early 1990s than alternative methods suggest. Evidence is provided that consumption increases in anticipation of higher future earnings.

JEL-codes: C32 E32 (search for similar items in EconPapers)
Pages: 22p
Date: 1999-07
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Citations: View citations in EconPapers (9)

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