Arbeitspapier
Mr. Keynes meets the classics: Government spending and the real exchange rate
In economies with fixed exchange rates, the adjustment to government spending shocks is asymmetric. A fiscal expansion appreciates the real exchange rate but does not stimulate output. A fiscal contraction does not alter the exchange rate, but lowers output. We develop these insights in a two-sector model of a small open economy with downward nominal wage rigidity. We establish new empirical evidence that supports the predictions of the model along several dimensions: not only does the exchange rate regime shape the fiscal transmission mechanism as predicted by the model - in doing so it also interacts with economic slack and inflation.
- Sprache
-
Englisch
- Erschienen in
-
Series: ifo Working Paper ; No. 352
- Klassifikation
-
Wirtschaft
Fiscal Policy
Open Economy Macroeconomics
International Business Cycles
- Thema
-
Downward nominal wage rigidity
government spending shocks
exchangerate peg
real exchange rate
nonlinear effects
asymmetric adjustment
depreciation bias
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Born, Benjamin
D'Ascanio, Francesco
Müller, Gernot J.
Pfeifer, Johannes
- Ereignis
-
Veröffentlichung
- (wer)
-
ifo Institute - Leibniz Institute for Economic Research at the University of Munich
- (wo)
-
Munich
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Born, Benjamin
- D'Ascanio, Francesco
- Müller, Gernot J.
- Pfeifer, Johannes
- ifo Institute - Leibniz Institute for Economic Research at the University of Munich
Entstanden
- 2021
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