The Composition of Government Spending and the Real Exchange Rate
Vahagn Galstyan and
Philip Lane ()
No 6903, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We show that the composition of government spending influences the long-run behaviour of the real exchange rate. We develop a two-sector small open economy model in which an increase in government consumption is associated with real appreciation, while an increase in government investment may generate real depreciation. Our empirical work confirms that government consumption and government investment have differential effects on the real exchange rate and the relative price of nontradables.
Keywords: government consumption; government investment; real exchange rate (search for similar items in EconPapers)
JEL-codes: E62 F31 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
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 firstname.lastname@example.org
Journal Article: The Composition of Government Spending and the Real Exchange Rate (2009)
Working Paper: The Composition of Government Spending and the Real Exchange Rate (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:6903
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=6903
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 ().