The contribution of foreign borrowing to the New Zealand economy

Anthony Makin, Wei Zhang and Grant Scobie

New Zealand Economic Papers, 2009, vol. 43, issue 3, 263-278

Abstract: New Zealand's persistent current account deficits and high external debt level remain central to ongoing economic policy debate. However, what is often overlooked is the potentially positive macroeconomic contribution made by foreign finance. This paper suggests that foreign capital inflows, the counterpart of current account deficits, have in fact made a significant contribution to New Zealand national income from a growth accounting perspective. A stylised national balance sheet that includes New Zealand's assets and foreign liabilities also places the stock of foreign debt in proper context and reveals that national wealth gains have been significant as well.

Keywords: foreign borrowing; national income; national wealth (search for similar items in EconPapers)
Date: 2009
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Working Paper: The Contribution of Foreign Borrowing to the New Zealand Economy (2008)
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DOI: 10.1080/00779950903308786

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