The New Open Economy Macroeconomics of Government Debt
Giovanni Ganelli ()
No 83, Royal Economic Society Annual Conference 2003 from Royal Economic Society
In this paper we introduce an overlapping generations structure of the Blanchard (1985) type in a New Open Economy Macroeconomics model. This allows us to study a wider range of fiscal shocks compared to the traditional Mundell-Fleming and to the baseline Redux (Obstfeld and Rogoff 1995, 1996) models. One important policy implication of our model is that the tax cut implemented in the US in 2001 might have contributed to the appreciation of the Dollar vis-a-vis the Euro. In contrast, the imposition of fiscal constraints such as the ``Golden Rule'' proposed by the UK government can have opposite exchange rate effects.
Keywords: Overlapping generations; new open economy macroeconomics; debt; tax cut (search for similar items in EconPapers)
JEL-codes: F41 F31 H63 (search for similar items in EconPapers)
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Journal Article: The new open economy macroeconomics of government debt (2005)
Working Paper: The New Open Economy Macroeconomics of Government Debt (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:83
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