External Shocks and the Process of Fiscal Adjustment in a Small Open Developing Economy

30 Pages Posted: 15 Feb 2006

See all articles by Ke-young Chu

Ke-young Chu

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: March 2, 1987

Abstract

Fiscal policy responses to external shocks are analyzed in an institutional setting that typically characterizes a small open developing economy. In such an economy, taxation of external trade is a major source of government revenue, and external shocks have direct impacts on the fiscal sector. The paper discusses the roles of anticipation and policy rules in the fiscal adjustment process. The paper also discusses the implications of two possible policy rules--stabilizing government expenditure and stabilizing the fiscal balance.

Suggested Citation

Chu, Ke-young, External Shocks and the Process of Fiscal Adjustment in a Small Open Developing Economy (March 2, 1987). IMF Working Paper No. 87/11, Available at SSRN: https://ssrn.com/abstract=884574

Ke-young Chu (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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