The aim of this study is to quantify the impact that the fiscal stance of the New Zealand Government has had on the general level of economic activity. By using the concept of the constant employment budget balance and changes in real public debt it is possible to determine the size of the inflation adjusted structural budget imbalance. Using calculations of the inflation structural budget imbalance for the New Zealand Government, the impact of changes in the fiscal stance of the government – and other factors such as changes in the money supply and balance of trade – on the shortterm fluctuations in the business cycle will be estimated.
Journal of Economic and Social Policy, Vol. 6, no. 1 (2001), pp. 1-17