The Potential Contribution of Fiscal Policy to Rebalancing and Growth in New Zealand

Werner Schule

No 2010/128, IMF Working Papers from International Monetary Fund

Abstract: Simulations with the Fund’s GIMF model show that raising government savings in New Zealand permanently by 1 percent of GDP is likely to improve the current account balance by about ½ percent of GDP. The way government savings are achieved matters for GDP but little for the current account. However, results are sensitive to changes in the risk premium. Fiscally neutral changes in taxes and expenditures can raise output in the long run.

Keywords: WP; GDP; saving; risk premium; deficit; capital; Public savings; current account; tax and expenditure reform; government consumption spending; persistent current account deficit; government saving; CA ratio; GDP gain; Return on investment; Government consumption; Income; Consumption; Global (search for similar items in EconPapers)
Pages: 24
Date: 2010-05-01
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Citations: View citations in EconPapers (3)

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