{
  "title": "Public Spending Management and Macroeconomic Interdependence",
  "publication": "IMF Working Papers, June 1, 2004",
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  "summary": "This paper studies, in the context of a New Open Economy Macroeconomics (NOEM) model, the effects of \"public competition policies\" aimed at improving the efficiency of public spending. Such measures are modeled as an increase in the price elasticity of public consumption.",
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      "heading": "Summary and key findings",
      "content": "- This paper studies, in the context of a New Open Economy Macroeconomics (NOEM) model, the effects of \"public competition policies\" aimed at improving the efficiency of public spending.\n- Such measures are modeled as an increase in the price elasticity of public consumption.\n- The paper finds that public competition policies significantly affect macroeconomic interdependence across countries.\n- Following a domestic fiscal expansion, an higher public price elasticity increases the substitutability between goods purchased by the domestic and the foreign governments.\n- The same exchange rate variation can therefore sustain larger shifts in relative demand for goods.\n- The expenditure-switching effect is magnified, implying a larger change in relative output.\n- In welfare terms, countries with a larger government sector have an incentive to promote public competition policies."
    },
    {
      "heading": "Model and mechanisms",
      "content": "- Framework: New Open Economy Macroeconomics (NOEM) model.\n- Policy representation: Public competition policies are represented as an increase in the price elasticity of public consumption.\n- Transmission channels highlighted:\n  - Increased substitutability between domestically and foreign-purchased government goods.\n  - Exchange rate variations sustain larger shifts in relative demand for goods.\n  - Magnified expenditure-switching effect leading to larger changes in relative output."
    },
    {
      "heading": "Policy implications and welfare",
      "content": "- Public competition policies materially alter macroeconomic interdependence across countries.\n- Countries with a larger government sector gain greater welfare incentives to adopt public competition policies."
    },
    {
      "heading": "Metadata and classification (as provided)",
      "content": "- Subject: Consumption, Exchange rates, Expenditure, External position, Foreign assets, Foreign exchange, National accounts, Private consumption\n- Keywords: Consumption, consumption index, efficiency-enhancing measure, Euler equation, exchange rate, Exchange rates, expenditure-switching effect, Foreign assets, Global, government spending, macroeconomic interdependence, money demand equation, NOEM, NOEM model, Private consumption, Public competition policies, utility function, WP\n- Pages: 22\n- Volume: 2004\n- Issue: 102\n- Series: Working Paper No. 2004/102\n- DOI: https://doi.org/10.5089/9781451852646.001\n- Stock No: WPIEA1022004\n- ISBN: 9781451852646\n- ISSN: 1018-5941\n\nPublic Spending Management and Macroeconomic Interdependence — Giovanni Ganelli, June 1, 2004 (IMF Working Papers).\n\n---\n\n Content in this bundle\n\n- wp04102\n  - wp04102 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp04102 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/public-spending-management-and-macroeconomic-interdependence-17411"
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    "Authors: Giovanni Ganelli",
    "Published: June 1, 2004",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451852646.001",
    "This paper studies, in the context of a New Open Economy Macroeconomics (NOEM) model, the effects of \"public competition policies\" aimed at improving the efficiency of public spending.",
    "Such measures are modeled as an increase in the price elasticity of public consumption.",
    "The paper finds that public competition policies significantly affect macroeconomic interdependence across countries.",
    "Following a domestic fiscal expansion, an higher public price elasticity increases the substitutability between goods purchased by the domestic and the foreign governments.",
    "The same exchange rate variation can therefore sustain larger shifts in relative demand for goods.",
    "The expenditure-switching effect is magnified, implying a larger change in relative output.",
    "In welfare terms, countries with a larger government sector have an incentive to promote public competition policies.",
    "Framework: New Open Economy Macroeconomics (NOEM) model.",
    "Policy representation: Public competition policies are represented as an increase in the price elasticity of public consumption.",
    "Transmission channels highlighted:",
    "Public competition policies materially alter macroeconomic interdependence across countries.",
    "Countries with a larger government sector gain greater welfare incentives to adopt public competition policies.",
    "Subject: Consumption, Exchange rates, Expenditure, External position, Foreign assets, Foreign exchange, National accounts, Private consumption",
    "Keywords: Consumption, consumption index, efficiency-enhancing measure, Euler equation, exchange rate, Exchange rates, expenditure-switching effect, Foreign assets, Global, government spending, macroeconomic interdependence, money demand equation, NOEM, NOEM model, Private consumption, Public competition policies, utility function, WP",
    "Pages: 22",
    "Volume: 2004",
    "Issue: 102",
    "Series: Working Paper No. 2004/102",
    "DOI: https://doi.org/10.5089/9781451852646.001",
    "Stock No: WPIEA1022004",
    "ISBN: 9781451852646",
    "ISSN: 1018-5941",
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