The short-run nationwide macroeconomic effects of the Canterbury earthquakes

Abstract

We examine the short-run impact of the two Canterbury earthquakes (4/9/2010 and 22/2/2011) on the New Zealand economy using vector autoregressive models. Maybe surprisingly, we find little evidence of a pronounced impact on the aggregate economy. Our results suggest that the earthquakes reduced consumer price index inflation moderately, and the first earthquake had a small but short-lived, adverse effect on the real gross domestic product growth. At the very worse, it appears that policies (by the government and the Reserve Bank) have been successful in mitigating any serious adverse macroeconomic impact. The more significant impact of the earthquakes is to be found at the regional level.