Predicting New Zealand's Real GDP

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Following France and Germany is New Zealand.

The model for New Zealand is also obtained by trial-and-error method. Empirical constant A and the specific age have been varied in order to fit amplitude and major features of the observed curve. The best fit value is A=$220 (1990 US$), i.e. less than in France and Germany. The specific age population in New Zealand is 14 years, which is different from that in the US, Japan, France, and Germany. The age pyramid enumerated by the 2006 census was extrapolated in the past and in the future in order to estimate the number of 14-year-olds in (4).

Figure 4 presents observed and predicted GDP for New Zealand. As for other countries, the original readings of GDP were obtained from the Conference Board. Both curves in the left panel are characterized by high-amplitude oscillations likely associated with measurement errors. Therefore, in the right panel of Figure 4, the original curves are smoothed with MA(5) and MA(3), respectively. Without prejudice to the mainstream economics, we have failed to find such a good prediction of real GDP elsewhere. Shape, amplitude, and timing of the curves are in an excellent agreement after 1980. There is no danger of a deep recession in New Zealand, but the rate of real economic growth will be very low (~0.5% per year in average) in the years to come. Before 1980, data are likely not reliable due to significant revisions to relevant definitions.

Figure 4. Left Panel: Observed and predicted growth rate of real GDP per capita in New Zealand. Right panel: The observed curve is smoothed with a 5-year moving average. The predicted rate is smoothed with MA(3). One can observe an outstanding agreement between the smoothed curves. Red circle uses the reading for 2008.

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