How New Zealand adjusts to macroeconomic shocks: implications for joining a currency area

Sharon McCaw and Christopher McDermott

Reserve Bank of New Zealand Bulletin, 2000, vol. 63, No 1

Abstract: In this article we consider how the New Zealand economy might adjust to shocks if it were a member of a currency union. In a currency union the exchange rate can no longer act as a mechanism of adjustment. Consequently, we consider the role of alternative adjustment mechanisms, such as migration, price and wage flexibility, and fiscal adjustment.

Date: 2000
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