This paper studies how the interaction between the monetary policy regime and the degree of home bias in public consumption affects the Exchange rate response to fiscal shocks in a generalized version of the Redux model of Obstfeld and Rogoff (1995). We show that the joint presence of home bias in public consumption and endogenous monetary policy overturns the results of the Redux model implying an Exchange rate appreciation in response to an expansionary fiscal policy.

Fiscal shocks and the exchange rate in a generalized Redux model / DI GIORGIO, Giorgio; Nisticò, S.; Traficante, G.; Nistico', Salvatore. - In: ECONOMIC NOTES. - ISSN 1468-0300. - 44:3(2015), pp. 419-435. [10.1111/ecno.12042]

Fiscal shocks and the exchange rate in a generalized Redux model

DI GIORGIO, GIORGIO;NISTICO', SALVATORE
2015

Abstract

This paper studies how the interaction between the monetary policy regime and the degree of home bias in public consumption affects the Exchange rate response to fiscal shocks in a generalized version of the Redux model of Obstfeld and Rogoff (1995). We show that the joint presence of home bias in public consumption and endogenous monetary policy overturns the results of the Redux model implying an Exchange rate appreciation in response to an expansionary fiscal policy.
Fiscal shocks and the exchange rate in a generalized Redux model / DI GIORGIO, Giorgio; Nisticò, S.; Traficante, G.; Nistico', Salvatore. - In: ECONOMIC NOTES. - ISSN 1468-0300. - 44:3(2015), pp. 419-435. [10.1111/ecno.12042]
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/159370
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