Fiscal Shocks and The Real Exchange Rate

Agustín S. Bénétrix and Philip R. Lane
Authors registered in the RePEc Author Service: Philip Lane () and Agustín S. Bénétrix ()

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: We estimate the impact of shocks to government spending on the real exchange rate for a panel of EMU member countries. Our key finding is that the impact differs across different types of government spending, with shocks to public investment generating a larger and more persistent impact on the real exchange rate than shocks to government consumption. Within the latter category, we also show that the impact of shocks to the wage component of government consumption is larger than for shocks to the non-wage component.

New Economics Papers: this item is included in nep-cba, nep-eec, nep-ifn, nep-mac and nep-opm
Date: 2009-03-03
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