We adopt a macro-economic modelling approach to estimating the potential im- pact of swine flu on the New Zealand economy. In particular, we use consumption and labour shocks to mimic the initial impact of the virus and use the Reserve... more
We adopt a macro-economic modelling approach to estimating the potential im- pact of swine flu on the New Zealand economy. In particular, we use consumption and labour shocks to mimic the initial impact of the virus and use the Reserve Bank's new KITT model to model the dynamics of the shock transmission. We find relatively small impacts on the macroeconomy. Based on Ministry of Health assumptions that suggest less than 200 swine flu related deaths, we find declines in output of at most 0.62 percent. This note considers the impact of swine flu (that is, influenza A H1N1) on the New Zealand macroeconomy. The approach is similar to the macroeconomic modelling approach Keogh-Brown et al. (2009) use to model the impact of an influenza outbreak on the United Kingdom. Our analysis is based around three sets of assumptions about swine flu: (i) a set of epidemiology assumptions regarding the clinical attack rate and clinical fatality rate; (ii) an assumption that predominantly consumption and labour shocks can be used to mimic the initial macroeconomic impact; and (iii) the use of the KITT model to map the transmission of the shocks to the rest of the macroeconomy. The results are conditional on all three sets of assumptions. Our preferred baseline case is predicated on recent Ministry of Health as- sumptions that suggest less than 200 swine flu deaths. We find relatively mild declines in output of, at most, 0.62 percent cumulated over the first year after the outbreak. The output declines are driven by reduced consumption demand and reduced supply of labour. These shocks tend to have osetting implica- tions for inflation and hence monetary policy. Further, firms and households
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We evaluate the performance of an open economy DSGE-VAR model for New Zealand along both forecasting and policy dimensions. We show that forecasts from a DSGE-VAR and a'vanilla'DSGE model are competitive with, and in some... more
We evaluate the performance of an open economy DSGE-VAR model for New Zealand along both forecasting and policy dimensions. We show that forecasts from a DSGE-VAR and a'vanilla'DSGE model are competitive with, and in some dimensions superior to, the ...
Research Interests: Marketing, Econometrics, Forecasting, Bayesian methods, DSGE, and 3 moreDSGE Model, Real Time, and VAR model
We evaluate the performance of an open economy DSGE-VAR model for New Zealand along both forecasting and policy dimensions. We show that forecasts from a DSGE-VAR and a'vanilla'DSGE model are competitive with, and in some... more
We evaluate the performance of an open economy DSGE-VAR model for New Zealand along both forecasting and policy dimensions. We show that forecasts from a DSGE-VAR and a'vanilla'DSGE model are competitive with, and in some dimensions superior to, the ...
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We investigate the implications of the existence of multi-period fixed-rate loans for the behaviour of a small open economy exposed to finance shocks and housing boom-and-bust cycles. To this end, we propose a simple and analytically... more
We investigate the implications of the existence of multi-period fixed-rate loans for the behaviour of a small open economy exposed to finance shocks and housing boom-and-bust cycles. To this end, we propose a simple and analytically tractable method of incorporating ...
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ABSTRACT In December 2008, jointly with the Bank for International Settlements, the Reserve Bank hosted a workshop entitled “Nowcasting with Model Combination”. This workshop was an opportunity for central bank practitioners and local and... more
ABSTRACT In December 2008, jointly with the Bank for International Settlements, the Reserve Bank hosted a workshop entitled “Nowcasting with Model Combination”. This workshop was an opportunity for central bank practitioners and local and offshore academics to discuss recent technical advances in how to combine models for ‘nowcasting’ – the forecasting of current or near-term economic conditions. This note provides an overview of some themes that emerged from the workshop. Full papers are available from http://www.rbnz.govt.nz/research/workshops/december2008/3421588.html