Measuring uncertainty and its impact on the New Zealand economy

Aim: To explore the effect of uncertainty on the New Zealand economy, considering both uncertainty originating from overseas and that which is specific to New Zealand.

Outcome: Completion of this module will enable financial advisers (audience) to:

  • Understand the effects of global and domestic uncertainty on the New Zealand business cycle
  • Use that information to reassure clients about their investments during periods of macroeconomic uncertainty

Abstract: This Note explores the effect of uncertainty on the New Zealand economy taking into consideration events such as earthquakes, cyclones, and droughts as well as the global macroeconomic environment.

The study’s findings suggest that increases in domestic and global uncertainty result in significant falls in output, consumption and investment.