The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This paper assesses the impact of a disruption to capital inflows by examining past episodes of capital inflows in New Zealand and other countries. It also reviews the IMF's Global Economy Model (GEM), which is used to provide some estimates of the equilibrium relationship between New Zealand's real effective exchange rate and real commodity prices. The analysis also suggests that permanent changes in non-energy commodity prices can have a significant impact on New Zealand's equilibrium exchange rate.