Fiscal shocks and real exchange rate dynamics: Some evidence for Latin America

Guglielmo Maria Caporale, Davide Ciferri and Alessandro Girardi

Journal of International Money and Finance, 2011, vol. 30, issue 5, 709-723

Abstract: This paper analyses the effects of fiscal shocks in selected Latin American countries using a two-country model for output, labour input, government spending and relative prices. Dynamic simulation techniques are then applied, in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate. Using quarterly data over the period 1980-2006, we find that in a majority of cases fiscal shocks are the main driving force of real exchange rate fluctuations.

Keywords: Fiscal; shocks; Real; exchange; rate; Latin; American; countries (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (9)

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Working Paper: Fiscal Shocks and Real Exchange Rate Dynamics: Some Evidence for Latin America (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:30:y:2011:i:5:p:709-723

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