Automatic Fiscal Stabilisers: Implications for New Zealand

Julie Tam and Heather Kirkham ()

No 01/10, Treasury Working Paper Series from New Zealand Treasury

Abstract: Automatic fiscal stabilisers, or the cyclical components of the budget balance, are larger in New Zealand than in the average OECD country, reflecting both higher sensitivity to the conomic cycle, and a more volatile cycle. Fiscal vigilance is especially important in New Zealand. Large projected operating surpluses could easily disappear if lower economic outcomes are mistakenly assumed to be cyclical. But, automatic stabilisers are difficult to use in a policy framework as empirical estimates of the cyclical budget balance vary significantly. While the estimated trend in automatic stabilisers is broadly similar, the level varies significantly, such that at any point in time a 'structural surplus' may be dependant on the estimation method.

Keywords: automatic fiscal stabilisers; economic cycle; cyclical budget balance; expenditure and tax elasticities (search for similar items in EconPapers)
JEL-codes: E62 H61 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2000, Revised 2001
Note: An earlier draft of this paper was prepared by Julie Tam in 2000, and has been updated by Heather Kirkham.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://treasury.govt.nz/sites/default/files/2018-04/twp01-10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:01/10

Access Statistics for this paper

More papers in Treasury Working Paper Series from New Zealand Treasury New Zealand Treasury, PO Box 3724, Wellington 6140, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by CSS I&T Web & Publishing, The Treasury ().