Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/205604 
Year of Publication: 
2010
Series/Report no.: 
New Zealand Treasury Working Paper No. 10/01
Publisher: 
New Zealand Government, The Treasury, Wellington
Abstract: 
This working paper provides further detail on the modelling behind Challenges and Choices – New Zealand's Long-Term Fiscal Statement, published on 29 October 2009. Building on the first Statement of 2006, we construct two main fiscal scenarios over a 40- year horizon. The historic trends scenario allows historic and current spending and revenue settings to interact with changing demography. The sustainable debt scenario applies a fiscal constraint on non-benefit spending so that Crown net debt follows the Government's medium-term fiscal targets. The modelling innovations introduced this time do not alter the basic structure and principles of the Long-term Fiscal Model, but instead provide insights into government spending: public sector productivity growth and the growth of the basket of services each person receives. These innovations enable us to illustrate the effects of tradeoffs between broad spending categories in a constrained fiscal environment. In the 2009 Statement, these policy changes are combined into three possible scenarios for obtaining a sustainable fiscal position. The paper also illustrates the sensitivity of the fiscal position to small changes in the demographic, macroeconomic and fiscal modelling assumptions.
Subjects: 
Population
projections
social expenditure
fiscal costs
New Zealand
JEL: 
E62
H50
H68
J11
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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