How does monetary policy affect welfare?
30 June 2020
The Reserve Bank of New Zealand (RBNZ) Monetary Policy Amendment Act (2018) gave the bank a new aim of promoting “the prosperity and well-being of New Zealanders …” via the implementation of monetary policy directed at “achieving and maintaining stability in the general level of prices … and supporting maximum sustainable employment”.
The two variables specified in the RBNZ’s dual mandate are employment and inflation.
This working paper works out by how much each of these two variables affects self-reported well-being in New Zealand. This paper measures these variables using two different dimensions of well-being.
The first is Cantril’s Ladder of Life, which measures life satisfaction by first asking the respondent to imagine their life in the best possible light and to describe their hopes and wishes for the future.
The second captures the quality of an individual’s (either pleasant or unpleasant) day-to-day experiences, such as joy or sadness. Whereas the former has a long-time horizon, the latter’s focus is more on the short-term.
This paper finds that unemployment and inflation both reduce well-being although the relative size of the effects depends on how well-being is measured. An implication is that the New Zealand Government should better define what aspect of well-being it would like the RBNZ to promote in order to implement its statutory objective.
Downloads
Publications
Filter publications by topic.
1 May 2023
28 February 2023
28 February 2023
27 February 2023
27 February 2023
23 December 2022
21 December 2022
30 September 2022
29 September 2022
18 July 2022
9 June 2022
31 May 2022
28 May 2022
28 May 2022
1 April 2022
1 December 2021
14 November 2021
8 November 2021
8 November 2021
8 November 2021
8 November 2021
27 September 2021
1 September 2021
27 May 2021
21 April 2021
21 April 2021
20 April 2021
20 April 2021
1 April 2021
25 February 2021
4 December 2020
30 November 2020
4 September 2020
31 August 2020
30 June 2020
28 April 2020
18 March 2020
9 March 2020
19 February 2020
30 November 2019
16 October 2019
16 August 2019
7 June 2019
16 May 2019
14 February 2019
1 February 2019
1 February 2019
24 December 2018
14 November 2018
1 August 2018
20 March 2018
22 February 2018
23 November 2017
23 November 2017
1 November 2017
29 September 2017
1 June 2017
20 February 2017
16 December 2016
28 November 2016
27 April 2016
12 January 2016
1 December 2015
29 June 2015
29 May 2015
29 May 2015
5 February 2015
21 January 2015
5 June 2014
5 June 2014
1 March 2014
19 December 2013
20 September 2013
16 July 2013
