Accounting for Growth and Output Gaps: Evidence from New Zealand

15 Pages Posted: 5 Jan 2003

See all articles by Kevin J. Fox

Kevin J. Fox

UNSW Australia Business School, School of Economics

Ulrich Kohli

Swiss National Bank

Ronald S. Warren

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Abstract

We evaluate New Zealand's macroeconomic performance over the 1967-1996 period, which witnessed numerous economic reforms. Using both index-number and econometric techniques, we decompose nominal GDP growth and the output gap into contributions from price level changes, productivity growth and changes in factor utilisation. Changes in domestic prices accounted for four-fifths of the growth in nominal GDP, while capital accumulation and employment growth were the most important factors determining real-output growth. Deviations in the domestic price level around its long-run trend contributed most heavily to changes in the nominal output gap. The real gap was influenced in any year variously by deviations of the terms of trade and labour input from their long-run trends, as well as by productivity shocks.

Suggested Citation

Fox, Kevin J. and Kohli, Ulrich and Warren, Ronald S., Accounting for Growth and Output Gaps: Evidence from New Zealand. Economic Record, Vol. 78, pp. 312-326, 2002. Available at SSRN: https://ssrn.com/abstract=324676

Kevin J. Fox (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
(02)9385-3320 (Phone)
(02)9313-6337 (Fax)

Ulrich Kohli

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland

Ronald S. Warren

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602
United States

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