{
  "title": "Real Exchange Rate Appreciation in Emerging Markets: Can Fiscal Policy Help?",
  "publication": "IMF Working Papers, January 10, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/real-exchange-rate-appreciation-in-emerging-markets-can-fiscal-policy-help-41196",
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  "summary": "A number of emerging markets have experienced substantial real exchange rate appreciation in recent years, generating concerns about competitiveness and prompting policymakers to respond with a combination of mitigating policies.",
  "sections": [
    {
      "heading": "Summary / Overview",
      "content": "- Several emerging markets have experienced substantial real exchange rate appreciation in recent years, raising competitiveness concerns and prompting policy responses.\n- The paper examines whether fiscal policy can alleviate appreciation pressures.\n- Sample: 28 emerging market economies over 1983-2011.\n- Paper length: 23 pages.\n- Series: Working Paper No. 2014/001, Issue: 001, Volume: 2014.\n- DOI: https://doi.org/10.5089/9781475523577.001\n- ISBN: 9781475523577\n- ISSN: 1018-5941"
    },
    {
      "heading": "Methodology",
      "content": "- Estimated a dynamic model of the real exchange rate using the sample of 28 emerging market economies over 1983-2011.\n- Analyses differentiate between permanent and temporary fiscal adjustments and assess the role of spending composition."
    },
    {
      "heading": "Key Findings",
      "content": "- A permanent fiscal adjustment may reduce real appreciation pressures over the long term.\n- The composition of public spending matters: reductions in current spending play a key role in easing appreciation pressures.\n- Public investment composition and fiscal discipline interact with exchange rate dynamics and competitiveness outcomes."
    },
    {
      "heading": "Case Study: Brazil",
      "content": "- The paper focuses on Brazil to illustrate the importance of the empirical findings.\n- Results for Brazil suggest that maintaining fiscal discipline while increasing public investment is likely to ease real appreciation pressures.\n- Emphasizes the importance of tackling long-standing budget rigidities in Brazil."
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- Fiscal policy can be part of the toolkit to address real exchange rate appreciation in emerging markets.\n- Policymakers should consider permanent fiscal adjustments rather than solely temporary measures to achieve long-term reductions in appreciation pressures.\n- Prioritize reductions in current public spending as an effective composition strategy.\n- In countries like Brazil, combine fiscal discipline with targeted increases in public investment while addressing budget rigidities."
    },
    {
      "heading": "Subjects and Keywords (as provided)",
      "content": "- Subjects: Expenditure, Fiscal policy, Foreign exchange, Public investment and public-private partnerships (PPP), Public investment spending, Real exchange rates\n- Keywords: a number of emerging markets, appreciation, appreciation pressure, Asia and Pacific, emerging market, fiscal policy, government spending, investment, market GDP, public consumption, public investment, Public investment and public-private partnerships (PPP), Public investment spending, real exchange rate, Real exchange rates, REER appreciation, WP\n\nIMF Working Paper No. 2014/001 (2014), DOI: https://doi.org/10.5089/9781475523577.001\n\n---\n\n Content in this bundle\n\n- 1. Real Effective Exchange Rate: Long-Run Estimates\n  - 1. Real Effective Exchange Rate: Long-Run Estimates (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Real Effective Exchange Rate: Long-Run Estimates (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/real-exchange-rate-appreciation-in-emerging-markets-can-fiscal-policy-help-41196"
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    "Authors: Marialuz Moreno Badia, Alex Segura-Ubiergo",
    "Published: January 10, 2014",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475523577.001",
    "Several emerging markets have experienced substantial real exchange rate appreciation in recent years, raising competitiveness concerns and prompting policy responses.",
    "The paper examines whether fiscal policy can alleviate appreciation pressures.",
    "Sample: 28 emerging market economies over 1983-2011.",
    "Paper length: 23 pages.",
    "Series: Working Paper No. 2014/001, Issue: 001, Volume: 2014.",
    "DOI: https://doi.org/10.5089/9781475523577.001",
    "ISBN: 9781475523577",
    "ISSN: 1018-5941",
    "Estimated a dynamic model of the real exchange rate using the sample of 28 emerging market economies over 1983-2011.",
    "Analyses differentiate between permanent and temporary fiscal adjustments and assess the role of spending composition.",
    "A permanent fiscal adjustment may reduce real appreciation pressures over the long term.",
    "The composition of public spending matters: reductions in current spending play a key role in easing appreciation pressures.",
    "Public investment composition and fiscal discipline interact with exchange rate dynamics and competitiveness outcomes.",
    "The paper focuses on Brazil to illustrate the importance of the empirical findings.",
    "Results for Brazil suggest that maintaining fiscal discipline while increasing public investment is likely to ease real appreciation pressures.",
    "Emphasizes the importance of tackling long-standing budget rigidities in Brazil.",
    "Fiscal policy can be part of the toolkit to address real exchange rate appreciation in emerging markets.",
    "Policymakers should consider permanent fiscal adjustments rather than solely temporary measures to achieve long-term reductions in appreciation pressures.",
    "Prioritize reductions in current public spending as an effective composition strategy.",
    "In countries like Brazil, combine fiscal discipline with targeted increases in public investment while addressing budget rigidities.",
    "Subjects: Expenditure, Fiscal policy, Foreign exchange, Public investment and public-private partnerships (PPP), Public investment spending, Real exchange rates",
    "Keywords: a number of emerging markets, appreciation, appreciation pressure, Asia and Pacific, emerging market, fiscal policy, government spending, investment, market GDP, public consumption, public investment, Public investment and public-private partnerships (PPP), Public investment spending, real exchange rate, Real exchange rates, REER appreciation, WP",
    "**1. Real Effective Exchange Rate: Long-Run Estimates**"
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