Austerity and recession: 3 simple graphs that explain New Zealand's economic crisis

Economists working on macroeconomic policy - things like taxes and spending, interest rates and border controls on flows of trade and money - often refer to a set of key relationships governments can influence. In the textbooks, each of those relationships is drawn as a curve in a graph.

First is the IS ("investment-saving") curve. This says that if everything else stays the same, the Reserve Bank can increase ec