ABSTRACT
This requirement for clear and open forecasting and analysis could scarcely have come at a worse moment from an econometric point of view as New Zealand embarked on a comprehensive programme of macro-and microeconomic (structural) change in 1984, which has continued ever since (see Evans et al., 1996). This has opened the economy up to external and internal competition, removed subsidies and distortionary taxes, involving sweeping deregulation, privatization and corporatization of the public sector, the establishment of fiscal surpluses and a small and declining public debt to GDP ratio and the replacement of double-digit inflation by price stability. It is difficult to exaggerate the scale of these changes, which moved New Zealand from being probably the most regulated OECD economy towards the other end of the spectrum in less than a decade. The sequencing may not have been ideal as financial markets were deregulated first and labour markets last (Bollard and Mayes, 1993), but all parts of the economy were affected.
