Reviews and Consultation

The Macroeconomic Impacts of a Foot-and-mouth Disease Outbreak: An Information Paper for Department of the Prime Minister and Cabinet

Prepared by the Reserve Bank of New Zealand and the Treasury

This note was written in September 2002 as part of a wider government exercise in emergency preparedness. In considering the fiscal scenario and forecast for effects of an outbreak, some assumptions were made for the purpose of simplicity. One key assumption was that there is no government response to rectify the negative fiscal impact of any Foot and Mouth Disease outbreak. This assumption obviously has an effect on the results produced when projecting out over a longer time period.

The Reserve Bank of New Zealand undertook macro-economic analysis. Treasury's [Estimates of Revenue Effects of Small Tax Rate & Tax Base Changes] and Long Term Fiscal Model was used to generate a fiscal scenario. Treasury's models are designed for general, day to day, scenario analysis and reflect the technical assumptions and economic data used.

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