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This study employs the cointegrating VAR approach to characterise the relationships between the five exchange rates comprising the TWI and the share market in New Zealand. Weekly data covering January 1999 to June 2006 are analysed. The study discovers there are two types of long-run relationship mimicking the portfolio balance and goods market theories. That implies there is bi-directional causality in the foreign exchange and stock markets in both the short run and long run although different exchange rates may be implicated. In the long run, the empirical results for the relationship between the NZ-US dollar exchange rate and the overall share market index support both the portfolio balance and goods market theories. In the short run, the portfolio balance theory is further supported by all the exchange rates but the goods market theory is supported significantly only by the NZ-Australian dollar exchange rate. Thus the evidence is predominantly in support of the portfolio balance theory and that the firms most at risk of foreign exchange rate exposure are those that export to Australia.

Based on data for the 1974-95 period this paper estimates demand for narrow money and broad money in Brunei using the error-correction specification. Short-run and long-run elasticities are estimated with respect to real income, interest rate, expected price level and liquidity. Narrow money is quite responsive to changes in real income and interest rate in both the short and long terms. Broad money is income inelastic regardless of the time horizon, however, it is interest inelastic in the short run but interest elastic in the long run. Price elasticity of money demand is negligible in the short run but quite significant in the long run. Changes in the proportion of commercial bank assets placed in foreign money markets do not seem to affect demand for narrow money but their effect on the demand for broad money is both direct and significant.

Purpose -The combination of low rates of private saving and projected increases in the fiscal burden of financing a public pension scheme for an ageing population poses a major policy challenge in New Zealand. Policy discourses espouse pension reform and the redoubling of household saving efforts. However, some of the policy options could have offsetting effects. To inform the debate with research findings, the purpose of this paper is to revisit the relationship between social security and household saving. Design/methodology/approach -The paper employs a constructed social security wealth (SSW) variable in a hybrid life cycle-permanent income consumption/saving model pioneered by Feldstein. Time series techniques are used. Findings -The results show that an increase in the constructed gross SSW variable boosts saving. This suggests that concerns with accumulating assets to match the length of the implicit life expectancy at the current pension eligibility age overwhelm the view that the pension benefit is an adequate substitute for household assets. The other findings are consistent with a priori expectations: increases in disposable income boost saving; there is a significant propensity to consume out of household net wealth; and inflation and unemployment engender significant precautionary saving. Practical implications -A policy to raise the retirement age may reduce the gross SSW and therefore the fiscal burden of the public pension scheme. However, in shortening the expected post-retirement period that households have to save for, the policy may also reduce the saving rate. Originality/value -Although the Feldstein approach has been used in studies in countries like Australia, Canada and the USA, a comparable study has not been undertaken in New Zealand. This study seeks to fill that void.