Arbeitspapier

Stabilisation and Rebalancing with Fiscal or Monetary Devaluation: A Model-Based Comparison

The paper uses a small open economy general-equilibrium model to compare fiscal and nom-inal exchange rate devaluation with respect to their impact on economic activity and the cur-rent account. In particular, it investigates to which extent fiscal devaluation mimics nominal exchange rate adjustment and mitigates the output loss associated with demand rebalancing and external adjustment. The results suggest that internal or external devaluation can support external adjustment and mitigate its impact on economic activity, without leading to lasting adjustment themselves. The quantitative contribution of a tax shift from labour to consump-tion as standard example of fiscal devaluation remains moderate, however.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 5625

Klassifikation
Wirtschaft
Monetary Policy
Open Economy Macroeconomics
Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications
Thema
devaluation
exchange rate
tax shift
recession
rebalancing

Ereignis
Geistige Schöpfung
(wer)
Vogel, Lukas
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2015

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Vogel, Lukas
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2015

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