Macroeconomics Essay Example | Topics and Well Written Essays - 1500 words - 5

Macroeconomics - Essay Example s New Zealand’s low rate of unemployment related to its slow economic growth, or is the low rate of unemployment related to its high rate of inflation? Is tight monetary policy contributing to the slow economic growth of the country? Is the high inflation contributing to low economic growth? These and many other questions remain unanswered. This paper aims at providing answers to the above questions. The paper intends to do this by gathering relevant information on unemployment, economic growth, inflation and monetary policy in New Zealand and evaluate it in relation to relevant theories so as to gain a reasonable basis for explaining seeming controversies identified above. The rest of the paper is organised as follows: section 2 provides information on economic growth, inflation, unemployment, monetary and fiscal policies in New Zealand; Section 3 provides a discussion of the facts outlined in section 2 in relation to relevant economic theories; and section 4 provides some conclusions and recommendations. According to Evans et al. (1996) New Zealand launched into a sequence of economic reforms following a constitutional and foreign exchange crisis in 1984. These reforms have been described by David Henderson (1995) cited by Evans et al. (1996) as â€Å"one of the most notable episodes of liberalisation that history has to offer†. The economic reforms included macroeconomic stabilisation and structural change. According to the OECD (2007) New Zealand began economic reforms 2 decades ago, which have laid the foundations for entrepreneurship and innovation in the country. The country maintains a well functioning product market, as well as a flexible labour market. In addition, the economy has been very open. (OECD, 2007). New Zealand also maintains world-class Public research organisations in many areas, especially in education and health. (OECD, 2007). Despite these positive aspects of the economy, the country has failed to maintain record levels of economic