Capital Mobility and the Effectiveness of Fiscal Policy in Open Economies

Arbeitspapier

This paper uses a dynamic general equilibrium two-country optimizing 'new-open economy macroeconomics? model to analyze the consequences of international capital mobility for the effectiveness of fiscal policy. Conventional wisdom suggests that higher capital mobility diminishes the effectiveness of fiscal policy. The model laid out in this paper provides an example that a higher degree of capital mobility can also increase the effectiveness of fiscal policy. This tends to be the case if the stance of monetary policy can be described by means of a simple monetary policy rule.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1164

Classification and Topics

• Classification: Wirtschaft ; Financial Aspects of Economic Integration ; Open Economy Macroeconomics
• Subject: Fiscal policy ; Capital mobility ; Financial market integration ; Monetary Policy ; Finanzpolitik ; Wirtschaftspolitische Wirkungsanalyse ; Neue Makroökonomik offener Volkswirtschaften ; Offene Volkswirtschaft ; Allgemeines Gleichgewicht ; Internationale Kapitalmobilität ; Internationaler Finanzmarkt ; Geldpolitisches Ziel ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pierdzioch, Christian
• Event: Veröffentlichung
• (who): Kiel Institute for World Economics (IfW)
• (where): Kiel
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/17911
• Last update: 10.03.2025, 11:42 AM CET