ABSTRACT
It is important to appreciate how regulated the New Zealand economy had become by mid-1984. Interest rates were controlled and lending policies directed; the exchange rate was fixed; and wages and prices were subject to a comprehensive "freeze." At the same time, several economic indicators were poor. The current account and budget deficits were very high and increasing, and inflation, artificially low due to a price freeze, was expected to accelerate sharply the following year. Agricultural assistance had doubled over a very short 3-4 year period to 30-34 percent of the final value of output (PSE), with much of the support being directed to sheep meats, although farm incomes were falling in spite of this assistance. Many of these indicators are shown in Table 12.1.
