Fiscal shocks and helicopter money in open economy

Giorgio Di Giorgio and Guido Traficante

Economic Modelling, 2018, vol. 74, issue C, 77-87

Abstract: We study the effects of expansionary fiscal shocks in a two-country DSGE model with perpetual youth. We consider two alternative financing regimes, monetary financing and debt financing, and find that a money-financed fiscal stimulus is more expansionary on output and inflation. We investigate how the transmission mechanism is related to the open-economy dimension and how structural parameters affect macroeconomic dynamics.

Keywords: Exchange rate; Fiscal shocks; Helicopter drop (search for similar items in EconPapers)
JEL-codes: E32 E52 F41 F42 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Working Paper: Fiscal Shocks and Helicopter Money in Open Economy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:74:y:2018:i:c:p:77-87

DOI: 10.1016/j.econmod.2018.05.005

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