A Model of the New Zealand Economy

Abstract

The subject of this thesis is the construction of an economic model of the New Zealand economy. The objective of the model is to provide an adequate EX planation of the behaviour of producers and households including the interdependence of these two sectors of the economy and by so doing, establish a useful framework for studying the ramifications of economic policy PLANs. The EXPLAN model is designed to highlight the means by which markets within the New Zealand economy are inter-related and to illustrate the consequences of exogenous disturbances to any one market's activity, upon the workings of related markets. As a consequence of this approach to modelling economic activity we obtain explanations of output, employment and inflation which rely primarily upon the interdependence of domestic markets. Most notably the failure of any particular market to clear during a time period (the EXPLAN model identifies a March year as a single period) has ramifications for the level of transactions in all related markets during the same and subsequent periods.