This paper studies the dynamics of net foreign liabilities across a number of countries. Our historical analysis suggests that an orderly reduction in a country’s net foreign liabilities has mostly occurred when there was significant improvement in gross public savings through deliberate...

The paper finds that, given New Zealand’s conservative approach in implementing the Basel II framework, New Zealand banks’ headline capital ratios underestimate their capital strength. A comparison with Canadian, UK and Australian banks highlights the impact of New Zealand’s...

New Zealand’s economy continued to grow at a moderate rate, in part reflecting the effects of the recent drought and inflation. The macroeconomic policy has been framed to absorb adverse shocks with flexible exchange rates to serve as buffer. The planned pace of deficit reduction is...

This 2014 Article IV Consultation highlights that the economic expansion in New Zealand is becoming increasingly embedded and broad based, with growth exceeding 3 percent in the second half of 2013. The drivers include supportive financial conditions, record high export commodity prices,...

Housing cycles and their impact on the financial system and the macroeconomy have become the center of attention following the global financial crisis. This paper documents the characteristics of housing cycles in a large set of countries, and examines the determinants of house price movements....

The financial turmoil of the late 1990s prompted a broad search for tools and techniques for detecting and preventing financial crises, and more recent episodes of instability have high lighted the importance of continuous monitoring of financial systems as a tool for preventing crises. This...

Korean household debt has reached 148 percent of disposable income, high by emerging market standards. Most of this debt remains at variable rates, shifting the interest rate risk from better diversified financial institutions to households and increasing their sensitivity to macroeconomic...

We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and...

This Selected Issues paper for Belgium evaluates whether price increases in Belgium are excessive. It assesses the household and bank balance sheets and their vulnerability to a slowdown in housing prices, and identifies differences in real estate markets between Belgium and other countries. The...