dc.contributor.author | CORSETTI, Giancarlo | |
dc.contributor.author | KUESTER, Keith | |
dc.contributor.author | MÜLLER, Gernot J. | |
dc.date.accessioned | 2015-07-13T14:56:39Z | |
dc.date.available | 2015-07-13T14:56:39Z | |
dc.date.issued | 2011 | |
dc.identifier.citation | Economia Chilena, 2011, Vol. 14, No. 2, pp. 5-38 | |
dc.identifier.issn | 0717-3830 | |
dc.identifier.uri | https://hdl.handle.net/1814/36422 | |
dc.description.abstract | According to conventional wisdom, fiscal policy is more effective under a fixed exchange rate regime than under a flexible one. In this paper we reconsider the transmission of shocks to government spending across these regimes within a standard new-Keynesian model of a small open economy. Because of the stronger emphasis on intertemporal optimization, the new-Keynesian framework requires a precise specification of fiscal and monetary policies, and their interaction, at both short and long horizons. We derive an analytical characterization of the transmission mechanism of expansionary spending policies under a peg, showing that the long-term real interest rate necessarily rises if inflation rises on impact, in response to an increase in government spending. This drives down private demand even though short-term real rates fall. As this need not be the case under floating exchange rates, the conventional wisdom needs to be qualified. Under plausible medium-term fiscal policies, government spending is not necessarily less expansionary in a floating regime. | |
dc.language.iso | es | |
dc.relation.uri | http://www.bcentral.cl/eng/studies/economia-chilena/issues.htm | |
dc.title | Tipo de cambio flotante, tipo de cambio fijo y transmission de la politica fiscal | |
dc.type | Article | |
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