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Prepared by Benoît Mercereau (Ext. 3-4986).
New Zealand ranks 19th out of 30 OECD countries for openness, and the relative lack of openness in the economy is even larger when adjusting for the size of the economy. New Zealand’s openness is about 60 percent against about 150 percent for European countries of similar size, such as Ireland or Belgium. This measure of trade openness may understate the openness of the New Zealand economy however, because the country’s exports tend to have high domestic value-added and low import content.
Englund (1999) reports that the direct fiscal cost of the banking crisis in Sweden was about 2 percent of GDP. Most of the increase in public debt therefore corresponds to the cost of recession.