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Monetary policy and economic performance: the experience of New Zealand

Dr Alan Bollard, Chris Hunt

This article is an abridged version of a paper prepared for a conference commemorating the 80th anniversary of the Bank of Mexico held on 14–15 November. The theme of the conference was ‘Stability and Economic Growth: The Role of the Central Bank’. The article reviews New Zealand’s economic performance, which has improved significantly since the early 1990s. The article suggests that New Zealand’s monetary policy framework is likely to have played a role in lifting economic performance, along with many other factors, most notably the widespread economic reforms. The article discusses the ways in which inflation may affect economic growth and briefly summarises some empirical literature. It also ponders the benefits of business cycle stabilisation – which may be a by product of inflation targeting – a subject of some controversy in the economic literature. A full version of the paper can be accessed at