Floats pegs and the transmission of fiscal policy

One of the most popular pieces of wisdom in economic policy is the idea that fiscal policy is more effective in a fixed exchange rate regime or a currency union than in a flexible exchange rate regime. In this paper we revisit the theoretical foundations of the conventional wisdom on the relative ef...

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Autores principales:	Corsetti, Giancarlo, Kuester, Keith, Müller, Gernot J.
Formato:	Artículo
Lenguaje:	eng
Publicado:	Banco Central de Chile 2019
Materias:	POLÍTICA FISCAL POLÍTICA ECONÓMICA TIPO DE CAMBIO ECONOMÍA KEYNESIANA
Acceso en línea:	https://hdl.handle.net/20.500.12580/3788
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spelling	oai-20.500.12580-37882021-04-24T11:06:31Z Floats pegs and the transmission of fiscal policy Corsetti, Giancarlo Kuester, Keith Müller, Gernot J. POLÍTICA FISCAL POLÍTICA ECONÓMICA TIPO DE CAMBIO ECONOMÍA KEYNESIANA One of the most popular pieces of wisdom in economic policy is the idea that fiscal policy is more effective in a fixed exchange rate regime or a currency union than in a flexible exchange rate regime. In this paper we revisit the theoretical foundations of the conventional wisdom on the relative effectiveness of fiscal policy under alternative exchange rate regimes using a standard New Keynesian model of a small open economy. We do so by focusing our analysis on the inherent link between the macroeconomic effects of a short-run stimulus and private expectations about medium-run monetary and fiscal policy developments. We do not however deviate from the assumption of perfect credibility of the peg and we do not consider the case of prospective deficit monetization discussed in an important contribution by Dornbusch (1980). 2019-11-01T00:05:47Z 2019-11-01T00:05:47Z 2013 Artículo 978-956-7421-37-4 https://hdl.handle.net/20.500.12580/3788 eng Series on Central Banking Analysis and Economic Policies no. 17 Attribution-NonCommercial-NoDerivs 3.0 Chile http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ .pdf Sección o Parte de un Documento p. 235-281 application/pdf Banco Central de Chile
institution	Banco Central
collection	Banco Central
language	eng
topic	POLÍTICA FISCAL POLÍTICA ECONÓMICA TIPO DE CAMBIO ECONOMÍA KEYNESIANA
spellingShingle	POLÍTICA FISCAL POLÍTICA ECONÓMICA TIPO DE CAMBIO ECONOMÍA KEYNESIANA Corsetti, Giancarlo Kuester, Keith Müller, Gernot J. Floats pegs and the transmission of fiscal policy
description	One of the most popular pieces of wisdom in economic policy is the idea that fiscal policy is more effective in a fixed exchange rate regime or a currency union than in a flexible exchange rate regime. In this paper we revisit the theoretical foundations of the conventional wisdom on the relative effectiveness of fiscal policy under alternative exchange rate regimes using a standard New Keynesian model of a small open economy. We do so by focusing our analysis on the inherent link between the macroeconomic effects of a short-run stimulus and private expectations about medium-run monetary and fiscal policy developments. We do not however deviate from the assumption of perfect credibility of the peg and we do not consider the case of prospective deficit monetization discussed in an important contribution by Dornbusch (1980).
format	Artículo
author	Corsetti, Giancarlo Kuester, Keith Müller, Gernot J.
author_facet	Corsetti, Giancarlo Kuester, Keith Müller, Gernot J.
author_sort	Corsetti, Giancarlo
title	Floats pegs and the transmission of fiscal policy
title_short	Floats pegs and the transmission of fiscal policy
title_full	Floats pegs and the transmission of fiscal policy
title_fullStr	Floats pegs and the transmission of fiscal policy
title_full_unstemmed	Floats pegs and the transmission of fiscal policy
title_sort	floats pegs and the transmission of fiscal policy
publisher	Banco Central de Chile
publishDate	2019
url	https://hdl.handle.net/20.500.12580/3788
work_keys_str_mv	AT corsettigiancarlo floatspegsandthetransmissionoffiscalpolicy AT kuesterkeith floatspegsandthetransmissionoffiscalpolicy AT mullergernotj floatspegsandthetransmissionoffiscalpolicy
_version_	1718347016576172032

Floats pegs and the transmission of fiscal policy

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