The Treasury

Global Navigation

Personal tools

You are here: Home > Publications > Research and Policy > Working Papers > 2001 > Automatic Fiscal Stabilisers: Implications for New Zealand (WP 01/10)

Treasury
Publication

Automatic Fiscal Stabilisers: Implications for New Zealand - WP 01/10

Publication Details

  • Automatic Fiscal Stabilisers: Implications for New Zealand
  • Published: Dec 2001
  • Status: Current
  • Authors: Kirkham, Heather; Tam, Julie
  • JEL Classification: E62; H61
  • Hard copy: Available in PDF format only.
 

Automatic Fiscal Stabilisers: Implications for New Zealand

New Zealand Treasury Working Paper 01/10

Published Dec 2001

Authors: Julie Tam* and Heather Kirkham

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 economic 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.

Page top