Real Exchange Rate Effects of Fiscal Policy

49 Pages Posted: 28 Jun 2004

See all articles by Jeffrey D. Sachs

Jeffrey D. Sachs

Columbia University - Columbia Earth Institute; National Bureau of Economic Research (NBER)

Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR)

Date Written: 1984

Abstract

This paper develops a framework for analyzing the effects of fiscal policy on the real exchange rate. The short-run impact of various types of fiscal measures are considered as well as the dynamics of adjustment to long-run steady states. The analysis and related simulations suggest that the effect of fiscal policy changes on the real exchange rate can vary widely and will depend closely on a number of structural features, including the degree of asset substitutability,the composition of government spending, and the initial size of the public debt and net external position.

Suggested Citation

Sachs, Jeffrey D. and Wyplosz, Charles, Real Exchange Rate Effects of Fiscal Policy (1984). NBER Working Paper No. w1255, Available at SSRN: https://ssrn.com/abstract=256069

Jeffrey D. Sachs (Contact Author)

Columbia University - Columbia Earth Institute ( email )

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Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

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HOME PAGE: http://heiwww.unige.ch/~wyplosz

Centre for Economic Policy Research (CEPR)

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United Kingdom

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