Working Papers in full text
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
All
Other research-related activities and publications of the IMF can be found at IMF Research
|
Free Email Notification
Receive emails when we post new
items of interest to you.
Subscribe or
Modify your profile
|
|
|
|
The Effects of Government Spending under Limited Capital Mobility
|
Author/Editor: |
Shen, Wenyi | Yang, Shu-Chun S. |
| Authorized for Distribution: |
May 1, 2012 |
|
Electronic Access: |
Free Full Text (PDF file size is 1,028KB)
Use the free Adobe Acrobat Reader to view this PDF file.
|
|
|
|
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
|
|
Summary: This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fiscal multiplier in the short run. The decline of the multiplier is larger when facing debt-elastic country risk premia. Also, government spending is more expansionary with more home bias in government purchases, more sectoral rigidities, and a less flexible exchange rate. Whether the twin-deficit hypothesis holds depends crucially on the extent to which government deficits are financed externally.
|
|
|
|
Order a print copy
|
|
Series: |
Working Paper No. 12/129 |
|
Subject(s): |
Budget deficits | Developing countries | Economic models | External borrowing | Fiscal policy | Government expenditures | Monetary policy | Reserve management policy |
|
Author's keyword(s): |
Fiscal policy; fiscal multipliers; small-open DSGE models; developing countries; imperfect capital mobility |
|
|
|
|
| |
Published: |
|
May 1, 2012 |
|
|
|
|
| |
|
|
|
|
Format: |
|
Paper |
| |
Stock No: |
|
WPIEA2012129 |
|
Pages: |
|
40 |
| |
Price: |
|
US$18.00 (Academic Rate: US$18.00 )
|
|
|
|
|
|
|
