Reserve Bank of New Zealand Bulletin articles

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March 2002 (Vol 65, no 1)

Download the complete issue of the March 2002 bulletin (PDF 542KB)

Articles

Editors Note (PDF 19KB)

The Taylor Rule and its relevance to New Zealand monetary policy (PDF 48KB)

By Chris Plantier and Dean Scrimgeour
The Taylor rule is a simple formula devised to mimic the United States Federal Reserve's interest rate decisions and is thought to perform well in the United States. It is based on relationships between the output gap, neutral real interest rates and the extent to which actual inflation has departed from the desired inflation rate. This article discusses some strengths and weaknesses of the Taylor rule, and then puts it into the New Zealand context. To the extent that it is appropriate for New Zealand, the Taylor rule might provide a useful input into the monetary policy decision-making process at the Reserve Bank. We compare New Zealand's short-term interest rate path with that suggested by the Taylor rule, and discuss how the Bank can use the Taylor rule as part of its framework for thinking about interest rate decisions.

Exchange rate strategies for small open developed economies such as New Zealand (PDF 125KB)

By Nils Bjorksten and Anne-Marie Brook
Changes in the global financial system, together with new experience with fixed and floating exchange rates, have resulted in a reassessment of exchange rate strategies for both developed and emerging market economies. The emergence of a currency union in Europe has been seen by some as showing the path forward in the continuing integration process of developed nations, including New Zealand. In view of the large swings in the New Zealand exchange rate over the past decade, some attention has recently been paid to alternative exchange rate strategies that might allow for reductions in exchange rate variability, and potentially better economic growth performance. This article discusses these issues. It is an edited version of a paper presented by the Reserve Bank to an economic workshop on Exchange Rate Strategies for Developed Open Economies in the New Millennium, held in February 2002. Papers presented at this workshop are available at:
http://www.rbnz.govt.nz/research/workshops/111791/0111791.html

The Reserve Bank's external communications (PDF 35KB)

By Paul Jackman
This article reviews the way the Reserve Bank communicates its decisions and policies to external audiences. It assesses why the Bank needs a communications programme, the methods used, and the way evolving circumstances are changing the Bank's approach to its external communications.

Managing human resources - a central bank perspective (PDF 41KB)

By Donna Hickey and Geof Mortlock
The adage that "people are our greatest asset" has been a recurrent theme in many businesses and organisations through history. This is no less true for a central bank. Indeed, people are, without doubt, a central bank's most important resource. Our business relies heavily on the expertise, experience and sound judgement of our staff. A central bank's effectiveness crucially depends on its credibility, and this in turn largely comes down to the quality of its staff. Therefore, managing human resources effectively is a critical element in maintaining an effective and credible central bank. This article summarises the evolution of the Reserve Bank's approach to human resources management, placing this in the context of the changes that have occurred within the Bank's structure and governance arrangements over the last decade or so.

Extracting market expectations from option prices? (PDF 122KB)

By Aron Gereben
Indicators of market expectations based on option prices are gaining popularity among central banks. The Reserve Bank recently began to use these indicators in financial stability and monetary policy analysis. This article provides a non-technical overview of these techniques and highlights how they might be used, through examples.

Polymer bank notes (PDF 31KB)

By Brian Lang
In May 1999 the Reserve Bank issued its first polymer bank notes into circulation. By March 2000 all denominations had been converted from paper to polymer. By the end of 2001 approximately 110 million polymer notes had been issued into circulation. This article assesses the performance of polymer notes compared with our expectations at the time they were introduced.

Speeches

Inflation targeting 14 years on (PDF 171KB)

Alternatively, link to the html version of this speech by Dr Don Brash

An indebted people (PDF 53KB)

Alternatively, link to the html version of this speech by Dr Don Brash

The views expressed are those of individual authors and do not necessarily reflect official positions of the Reserve Bank of New Zealand. Articles published in this Bulletin may not be wholly or substantially reproduced without the permission of the Reserve Bank of New Zealand. Data, brief extracts from articles, and other material appearing in the Bulletin, may be used without restriction provided due acknowledgement is made of the source.