ARE THE PREDICTIONS OF THE MUNDELL-FLEMING MODEL APPLICABLE TO ARGENTINA?

Yu Hsing

Applied Econometrics and International Development, 2021, vol. 21, issue 1, 37-48

Abstract: Based on an extended IS-LM model incorporating the exchange rate in the money demand function, this paper finds that fiscal expansion is related with a raise in real output and causes the Argentine peso to appreciate and that monetary expansion is related with a rise in real output and causes the Argentine peso to depreciate. Except for the prediction of the ineffectiveness of fiscal expansion on real output, other predictions of the Mundell-Fleming model are applicable to Argentina.

Keywords: Mundell-Fleming model; monetary policy; fiscal policy; exchange rates. (search for similar items in EconPapers)
JEL-codes: E52 E62 F41 (search for similar items in EconPapers)
Date: 2021
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