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dc.contributor.authorFielding, David
dc.date.available2011-09-23T03:20:17Z
dc.date.copyright2011-06-01
dc.identifier.citationFielding, D. (2011). New Zealand: The Last Bastion of Textbook Open-economy Macroeconomics (Economics Discussion Papers Series No. 1105). University of Otago. Retrieved from http://hdl.handle.net/10523/1874en
dc.identifier.issn1178-2293
dc.identifier.urihttp://hdl.handle.net/10523/1874
dc.description.abstractRecent empirical research into the macroeconomic effects of fiscal policy shocks has generated a ‘puzzle’. Both Keynesian and Real Business Cycle models predict that a fiscal expansion will lead to a real exchange rate appreciation. However, in almost all the countries that have been studied, positive shocks to government spending cause the real exchange rate to depreciate. Recent theoretical work suggests that this unexpected result might reflect incomplete international financial market integration. The country where the incomplete markets assumption is least plausible is New Zealand, because of its integration into the Australian financial system. We show that in New Zealand there is no puzzle, and the standard textbook result still holds. Our counterfactual results are consistent with the argument that the puzzle is to be explained by an absence of complete international financial market integration in most parts of the world.en_NZ
dc.format.mimetypeapplication/pdf
dc.language.isoenen_NZ
dc.publisherUniversity of Otagoen_NZ
dc.relation.ispartofseriesEconomics Discussion Papers Seriesen_NZ
dc.relation.urihttp://www.business.otago.ac.nz/econ/research/discussionpapers/index.htmlen_NZ
dc.subjectGovernment purchasesen_NZ
dc.subjectReal exchange rateen_NZ
dc.subjectVAR modelen_NZ
dc.titleNew Zealand: The Last Bastion of Textbook Open-economy Macroeconomicsen_NZ
dc.typeDiscussion Paperen_NZ
otago.schoolDepartment of Economicsen_NZ
otago.openaccessOpen
otago.relation.number1105en_NZ
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