Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/205494 
Year of Publication: 
2002
Series/Report no.: 
New Zealand Treasury Working Paper No. 02/19
Publisher: 
New Zealand Government, The Treasury, Wellington
Abstract: 
This paper presents two models of consumption for the primary purpose of forecasting consumption expenditure growth in New Zealand. The models, which are consistent with a range of consumption functions including the life-cycle and permanent income hypothesis, are error correction models with the long-run equations estimated using both the conventional ordinary least squares procedure as well as the Stock and Watson procedure of leads and lags. Unlike earlier New Zealand studies, actual data on household net wealth, rather than proxies or derived series were used. This allowed the wealth variable to modelled in disaggregated form. Mortgage equity withdrawal by households and funds brought into the economy by immigrants are two novel variables included in the consumption models. Migrant transfers were found to have an influence on short-run consumption growth, but not mortgage equity withdrawal although the latter did contribute to a higher overall model fit. Net non-financial wealth was found to have short-run influence on consumption but not in the long-run.
Subjects: 
Forecasting
consumption functions
wealth
migrant transfers
mortgage equity withdrawal
JEL: 
D12
D91
E21
E27
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

Files in This Item:
File
Size
432.87 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.