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Fiscal consolidation in an open economy
Christopher John Erceg
International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)
This paper uses a New Keynesian DSGE model of a small open economy to compare how the effects of fiscal consolidation differ depending on whether monetary policy is constrained by currency union membership or by the zero lower bound on policy rates. We show that there are important differences in the impact of fiscal shocks across these monetary regimes that depend both on the duration of the zero lower bound and on features that determine the responsiveness of inflation.
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon and nep-opm
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Related works: Journal Article: Fiscal Consolidation in an Open Economy (2012) Working Paper: Fiscal Consolidation in an Open Economy (2012) Working Paper: Fiscal Consolidation in an Open Economy (2012) This item may be available elsewhere in EconPapers: Search for items with the same title.
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Persistent link: http://EconPapers.repec.org/RePEc:fip:fedgif:1046
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