Last week, in association with the Monetary Policy Statement, the Reserve Bank published a short separate paper outlining how it was treating KiwiBuild for forecasting and monetary policy purposes. The bottom line was
The Bank has assumed that half to three quarters of what KiwiBuild contributes to residential investment will be offset by crowding out of other private investment over the forecast horizon.
It isn’t that different an assumption than they have been making since the current government first took office. This was what they wrote in the November 2017 Monetary Policy Statement
The Government has announced an intention to build 100,000 houses in the next decade…..our working assumption is that around half of the proposed increase will be offset by a reduction in private sector activity.
But, of course, then they refused to show us their workings or give us any supporting analysis.
I made brief…
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