24 The real exchange rate is the nominal exchange rate, measured on a trade-weighted basis, adjusted for the  relative prices between New Zealand and our trading partners. This captures the fact that New Zealand faces many exchange rates, and a weighted measure of individual bilateral exchange rates is necessary to summarise the country’s exchange rate position.
25 For discussion on the role of the exchange rate as a shock absorber, see: Karagedikli, et al. (2013). 26 The drivers of New Zealand’s exchange rate are examined in McDonald (2012). 27 Graham & Steenkamp (2012) outline the macroeconomic balance model. 28 For discussion on recent developments in New Zealand’s NFL, see Bascand (2017).