On Fiscal Policies, External Imbalances and Fundamental Equilibrium Exchange Rates

George Alogoskoufis

No 322, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents an investigation of the relationship between fiscal policies, fundamental equilibrium real exchange rates and misalignments under fixed nominal exchange rate regimes like those proposed by McKinnon and supply-side fiscal policy. The medium-run effects operate mainly through the accumulation or decumulation of external assets. The analysis suggests that even temporary shifts in fiscal policy have permanent effects on fundamental equilibrium exchange rates and the natural rate of unemployment. In addition, because of differential inflation across countries, real exchange rates become misaligned in the short-run.

Keywords: Exchange Rates; Fiscal Policy; Inflation; Unemployment (search for similar items in EconPapers)
Date: 1989-06
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=322 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:322

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=322

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().