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| Home > Research literature > Working papers > Fiscal foresight, forecast revisions and the effects of government spending in the open economy |
| Home > Research literature > Working papers > Fiscal foresight, forecast revisions and the effects of government spending in the open economy |
(Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)| Date: | 2012 |
| Description: | 35 p. |
| Abstract: | This paper investigates the effects of government spending on the real exchange rate and the trade balance in the US using a new VAR identification procedure based on spending forecast revisions. I find that the real exchange rate appreciates and the trade balance deteriorates after a government spending shock, although the effects are quantitatively small. The findings broadly match the theoretical predictions of the standard Mundell-Fleming model and differ substantially from those existing in literature. Differences are attributable to the fact that, because of fiscal foresight, the government spending is non-fundamental for the variables typically used in open economy VARs. Here, on the contrary, the estimated shock is fundamental. |
| Rights: | L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons:  |
| Language: | Anglès |
| Series: | Departament d'Economia i d'Història Econòmica. Unitat de Fonaments de l'Anàlisi Econòmica / Institut d'Anàlisi Econòmica (CSIC). Working papers |
| Series: | Working papers ; 907.12 |
| Document: | Working paper |
| Subject: | Política fiscal ; Pronòstic de l'economia ; Despeses públiques |
