Save now, prosper later

This paper uses NZIER’s dynamic Computable General Equilibrium (CGE) model of the New Zealand economy to conduct a preliminary investigation into how an increase in New Zealand’s national savings would affect New Zealand’s GDP and living standards. We do not specify how this increase might take place. We find that increased saving would reduce our overseas debt and thus cut our debt servicingrepayments. It is likely that the risk premium on borrowing costs would also fall under such a scenario. This would help boost investment.