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The Impact of Traded Goods Prices on the New Zealand Economy *
Author(s) -
WELLS GRAEME,
EVANS LEWIS
Publication year - 1985
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1985.tb01994.x
Subject(s) - purchasing power parity , economics , purchasing , purchasing power , relative price , empirical evidence , microeconomics , econometrics , economy , financial economics , macroeconomics , operations management , exchange rate , philosophy , epistemology
Recent empirical work in Australia and New Zealand reveals a diversity of estimates of the dynamic response to changes in traded goods prices. Similarly, there is conflicting evidence as to whether relative purchasing power parity is a characteristic of models estimated from data. In this paper it is argued that a reduced form approach to empirical modelling is appropriate for New Zealand's particular circumstances. The resulting model is simulated in a novel way, with results that argue against the use of a simple traded/non‐traded goods distinction in the analysis of foreign price impacts on New Zealand. Purchasing power parity is, however, consistent with the results.