The economy commenced a period of economic expansion in 1991, with the actual level of GDP not contracting until early 1998. This proved to be one of New Zealand’s most prolonged and strongest periods of business expansion for several decades. In addition, explicit inflation targets existed over the entire period, with the strong economic growth testing the Reserve Bank’s ability and resolve to maintain low and stable consumer price inflation. This article discusses the various economic stresses and strains that impacted on the economy over the 1991-97 period. In doing so, the article covers issues such as: • what actually happened to output, inflation, and monetary conditions; • which events were likely to prove one-off and hence be absent during the next business cycle upturn, and which features are likely to reoccur; and • which events can and can not be explained by theory, New Zealand’s past experience, and international developments. Answering these questions may help improve monetary policy. However, this article does not cover in detail the role of the Reserve Bank in the recent business cycle – beyond describing what happened to monetary conditions and price pressures. The role of monetary policy in the recent cycle is left to an article planned for the March 1999 Bulletin.