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ESSAY TITLE: The use of the OCR as the primary monetary policy tool has not been effective in bringing down the non-tradeable inflation rate and a growing concern has emerged that it may even harm long term economic growth" QUESTION: The RBNZ follows a rule that requires them to increase the OCR whenever they expect the inflation rate to exceed a desired target set by the PTA. Since early 2003 there have been successive increases in the OCR to bring down inflation rate and especially the non-tradeable inflation rate with no obvious success, leading some (as quoted above) to question whether the RBNZ is using the right instrument. Conduct some research on the recent changes to the OCR and the subsequent changes in the quantity of money (M3) and in the inflation rate in both tradeable and non-tradeable sectors. Discuss your findings and observations. Next, using your tools of macroeconomic analysis,...

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