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Comments on: RBNZ puts its macroprudential tools into perspective: The case of the prior housing cycle http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/ The Visible Hand in Economics Fri, 05 Jul 2013 18:51:00 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/#comment-41323 Fri, 05 Jul 2013 18:51:00 +0000 http://www.tvhe.co.nz/?p=9011#comment-41323 In reply to Miguel Sanchez.

Yeah, this link should work here!

https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=NZAE2007&paper_id=23

If it is having some problems, it should be on the NZAE 2010 conference site.

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By: Miguel Sanchez http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/#comment-41319 Fri, 05 Jul 2013 11:21:00 +0000 http://www.tvhe.co.nz/?p=9011#comment-41319 In reply to Matt Nolan.

Do you have a link to that forecast comparison paper?

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By: Matt Nolan http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/#comment-41313 Thu, 04 Jul 2013 10:32:00 +0000 http://www.tvhe.co.nz/?p=9011#comment-41313 In reply to Miguel Sanchez.

Interesting stuff – I didn’t pay any attention to the RBNZ until 2007, so have just worked with their description of events. Along with that 90 day bill and CPI forecast comparison paper that came out that showed that the RBNZ was the most “bullish” on both those fronts.

However, the high level of non-tradable inflation feeds right into your narrative.

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By: Miguel Sanchez http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/#comment-41309 Wed, 03 Jul 2013 09:34:00 +0000 http://www.tvhe.co.nz/?p=9011#comment-41309 The ‘in hindsight’ defence is far less convincing when you consider the sentence that follows:

“Concern over the appreciating exchange rate also acted to constrain the Reserve Bank in its ability to respond to pressure emanating from housing.”

There was never any point in that cycle where the exchange rate was expected to lead to (1) an undershoot of the inflation target, (2) a downturn in activity, or (3) any market disruption or other financial stability concerns. So it’s hard to imagine what that ‘constraint’ was, other than a personal/politically motivated view that the exchange rate should be lower. You’re right that a string a bad forecasts doesn’t automatically imply policy failure, but I think it was pretty clear even at the time that the Reserve Bank was consciously stepping outside the bounds of its price stability mandate.

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By: RBNZ puts its macroprudential tools into perspective: The case of the prior housing cycle | Fifth Estate http://www.tvhe.co.nz/2013/07/03/rbnz-puts-its-macroprudential-tools-into-perspective-the-case-of-the-prior-housing-cycle/#comment-41308 Wed, 03 Jul 2013 01:47:35 +0000 http://www.tvhe.co.nz/?p=9011#comment-41308 […] See full story on tvhe.co.nz […]

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