全球智库信息集成服务系统(G2TT): DP14073 Mr. Keynes meets the Classics: Government Spending and the Real Exchange Rate

G2TT

来源类型	Discussion paper
规范类型	论文
来源ID	DP14073
	DP14073 Mr. Keynes meets the Classics: Government Spending and the Real Exchange Rate
	Benjamin Born; Francesco D'Ascanio; Gernot Müller; Johannes Pfeifer
发表日期	2019-10-22
出版年	2019
语种	英语
摘要	In economies with fixed exchange rates, the adjustment to government spending shocks is asymmetric. A fiscal expansion appreciates the real exchange rate, but it does not stimulate economic activity. A fiscal contraction, instead, does not alter the exchange rate, but it reduces output. We develop these insights in a simple two-sector model of a small open economy with downward nominal wage rigidity. We then use alternative strategies to identify government spending shocks in a large cross-country data set with quarterly observations for up to 38 countries for the period from the early 1990s to 2018. For our baseline, we focus on the countries in the euro area. They lack a flexible exchange rate via-à-vis each other, so they provide an ideal testing ground for the theory. In our empirical specification, we allow positive and negative shocks to have asymmetric effects, and we are indeed able to reconcile Keynesian and Classcial views regarding the short run: negative shocks are recessionary, positive shocks are absorbed by exchange-rate appreciation. In line with the predictions of the model, we find that initial conditions matter, too. Recessions make positive shocks expansionary; in periods of high inflation, negative shocks affect the exchange rate. The evidence for countries outside the euro area lends further support to the predictions of the model.
主题	International Macroeconomics and Finance ; Monetary Economics and Fluctuations
关键词	Downward nominal wage rigidity Government spending shocks Exchange-rate peg Real exchange rate Nonlinear effects Asymmetric adjustment Depreciation bias
URL	https://cepr.org/publications/dp14073-0
来源智库	Centre for Economic Policy Research (United Kingdom)
资源类型	智库出版物
条目标识符	http://119.78.100.153/handle/2XGU8XDN/542959
推荐引用方式 GB/T 7714	Benjamin Born,Francesco D'Ascanio,Gernot Müller,et al. DP14073 Mr. Keynes meets the Classics: Government Spending and the Real Exchange Rate. 2019.