Exchange rate pass-through and fiscal multipliers

Chak Hung Jack Cheng ()

The B.E. Journal of Macroeconomics, 2013, vol. 13, issue 1, 609-641

Abstract: This paper develops a small open economy model with nominal rigidities and search-matching frictions to study the implications of the degree of exchange rate pass-through for fiscal multipliers. I allow for delayed pass-through to both imported consumption goods prices and imported intermediate goods prices. The result shows that incomplete exchange rate pass-through to imported goods prices dampens the fiscal impact on output and unemployment. However, incomplete pass-through to imported input prices has little effect on the output and unemployment multipliers.

Keywords: exchange rate pass-through; fiscal multipliers; unemployment (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1515/bejm-2012-0014

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