Using data from the Household Economic Survey we examine the vulnerability of several cohorts of owner-occupiers who had recently taken out mortgages. We focus particularly on the period leading up to the introduction of the "speed limit" on high LVR mortgage lending.

This paper studies the importance of intertemporal substitution in consumption for the cyclical co-movement of consumption, net worth and income in New Zealand. We can largely explain the empirical hump-shaped consumption response to a transitory wealth increase by allowing for time-varying...

We analyse the consumption-wealth relationship using a framework that accounts for transitory variation in wealth, and in a setting where transitory variation in household net worth is not dominated by boom and bust cycles in stock markets. We find that transitory variation in consumption...

A good farm price measure captures the price that a 'representative' farm would sell for each period. In reality, though, there is no representative farm and, even if there was, it would not sell every period anyway. Farms are not like bottles of milk. They are not identical and their prices are...

This paper examines the relationship between wages and consumer prices in New Zealand over the last 15 years. Reflecting the open nature of the New Zealand economy, the headline CPI is disaggregated into non-tradable and tradable prices. We find that there is a joint causality between wages and...

This paper characterises the relationship between wealth and consumption in New Zealand. We find that there exists a long-run cointegration relation between household consumption, income, housing wealth and net financial wealth. Permanent shocks account for most of the variation in wealth. This...

The Forecasting and Policy System model (FPS) has been a very useful tool for forecasting and communication at the Reserve Bank of New Zealand. In part, its success has been due to pragmatic use, and the evolution of the model to reflect changing views of the New Zealand economy. However, as...