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Our Research

Money and banking

Monetary policy is laid down by the Reserve Bank. It involves managing the supply of money and interest rates. The government uses monetary policy and related policies such as prudential policy to achieve objectives like inflation and financial stability.

Our research focus

Motu’s current and recent research into economic performance includes:

  • Effects of central bank policies on financial and economic outcomes.
  • Effects of the exchange rate on exporting activity.

Publications

Uncovering uncovered interest parity during the classical gold standard era, 1888-1905

Author: Andrew Coleman

Working Paper

When New York bankers
bought sterling low, or sold high,
they made good profits.

This paper examines the uncovered interest parity hypothesis using the dollar-sterling exchange rate during the gold standard era.

This period is interesting because the exchange…

Progress Report on the New History of the Reserve Bank of New Zealand

Authors: Arthur Grimes | Frank Holmes | Gary Hawke | John Singleton

Article

Work began in 2001 on a new official history of the RBNZ, focusing on the period since publication of Gary Hawke's study of the Bank in 1973.

This paper discusses the arrangements under which the current…

Innovation in Central Banking: A History of the Reserve Bank of New Zealand

Authors: Arthur Grimes | Frank Holmes | Gary Hawke | John Singleton

Article

In the 33 years since the last history of the New Zealand Reserve Bank the world has changed. New Zealanders now closely follow the Reserve Bank Governor’s statements and the Bank’s presence in the national…

An Exploration of Measures to Assess a Bank’s Credit Loss Experience

Authors: Arthur Grimes | Kurt Hess | Mark J Holmes

Article

Data related to the credit loss experience (CLE) of financial institutions are widely used for a wide variety of research yet literature typically omits a discussion on the construction and selection of suitable CLE proxies.

Based…

Credit Losses in Australasian Banking

Authors: Arthur Grimes | Kurt Hess | Mark J Holmes

Working Paper

This research was produced as  Working Paper 08/10 for the Department of Economics at the University of Waikato

We analyse determinants of bank credit losses in Australasia. Despite sizeable credit losses over the past two decades, ours is…

Do Exporters Cut the Hedge? Who Hedges and Why

Authors: Arthur Grimes | Richard Fabling

Working Paper

Produced for the Ministry of Economic Development as Occasional Paper 08/02. 

We use data derived from the Longitudinal Business Database (LBD) to analyse the currency denomination and hedging behaviour of New Zealand merchandise exporters.

For instance:

In which currencies…

Asymmetric Information, Financial Intermediation and the Monetary Transmission Mechanism: A Critical Review

Authors: Arthur Grimes | Iris Claus

Working Paper

This paper was produced as the New Zealand Treasury Working Paper 03/19

Macroeconomic models currently used by policy makers generally assume that the workings of financial markets can be fully summarised by financial prices, because the Modigliani and…

Four Lectures on Central Banking

Author: Arthur Grimes

Working Paper

These four lectures on central banking topics were presented in London between September and December 2013. The lectures were delivered as part of Arthur Grimes' NZ-UK Link Foundation Visiting Professorship, based at the University of…

The Relative Size of New Zealand Exchange Rate and Interest Rate Responses to News

Authors: Andrew Coleman | Öumlzer Karagedikli

Working Paper

This paper examines the relative size of the effects of New Zealand monetary policy and macroeconomic data surprises on the spot exchange rate, 2 and 5 year swap rate differentials, and the synthetic forward exchange…

Inflation and the Measurement of Saving and Housing Affordability

Author: Andrew Coleman

Working Paper

This paper analyses the effect of inflation on the measurement of saving and housing affordability in New Zealand.

When the inflation rate is positive, the income and saving of lenders is overstated and the saving of…

Regional and Industry Cycles in Australasia: Implications for a Common Currency

Author: Arthur Grimes

Working Paper

If two countries experience similar cycles, loss in monetary sovereignty following currency union may not be severe. Analysis of cyclical similarity is frequently carried out at the overall industry level, then interpreted with reference to…

New Zealand: A Typical Australasian Economy?

Author: Arthur Grimes

Working Paper

We examine trend economic developments in New Zealand and in each of Australia's six states and two territories (i.e. nine regions) in order to inform issues regarding economic policy harmonisation across Australasia.

Our focus is on…

Monetary Policy and Economic Imbalances: An Ethnographic Examination of the Arbee Rituals

Author: Arthur Grimes

Article

In his "Life Among the Econ" Axel Leijonhufvud (1973) took an ethnographic approach to describing the Econ tribe and, especially, two of its components: the Macro and the Micro. My purpose is to delve further…

Export Performance, Invoice Currency, and Heterogeneous Exchange Rate Pass-Through

Authors: Lynda Sanderson | Richard Fabling

Working Paper

Using comprehensive, shipment-level merchandise trade data, we examine the extent to which New Zealand exporters maintain stable New Zealand dollar prices by passing on exchange rate changes to foreign customers.

We find that the extent to…
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Wellington 6142, New Zealand

Phone: 64 4 939 4250

Email: info@motu.org.nz