Global shocks, economic growth and financial crises: 120 years of New Zealand experience

Michael Bordo, David Hargreaves and Mizuho Kida

No 16027, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We identify the timing of currency, banking crises and sudden stops in New Zealand from 1880 to 2008, and consider the extent to which empirical models can explain New Zealand's crisis history. We find that the cross country evidence on the determinants of crises fits New Zealand experience reasonably well. A number of the risk factors that correlate with crises internationally-such as domestic imbalances, external debt, and currency mismatches-were elevated for New Zealand when the country had more frequent crises and have improved in the recent (more stable) period. However, a time-series analysis of New Zealand growth over 120 years shows that global factors-such as the US growth rate and terms of trade-explain New Zealand growth fairly well, and that crisis dummy variables do not have significant additional explanatory power. This suggests that having sound institutions and policies may help avoid severe domestic crises, but will not be sufficient to avoid the domestic economic impact of the global business cycle.

JEL-codes: G01 (search for similar items in EconPapers)
Date: 2010-05
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Bordo, Michael & Hargreaves, David & Kida, Mizuho, 2011. "Global shocks, economic growth and financial crises: 120 years of New Zealand experience," Financial History Review, Cambridge University Press, vol. 18(03), pages 331-355, December.

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Journal Article: Global shocks, economic growth and financial crises: 120 years of New Zealand experience (2011)
Working Paper: Global shocks, economic growth and financial crises: 120 years of New Zealand experience (2009)
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