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.; Nisticò, 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.
| File | Dimensione | Formato | |
|---|---|---|---|
|
DGNTecnotes.pdf
Solo gestori archivio
Tipologia:
Versione dell'editore
Licenza:
Tutti i diritti riservati
Dimensione
488.07 kB
Formato
Adobe PDF
|
488.07 kB | Adobe PDF | Visualizza/Apri |
Pubblicazioni consigliate
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
