The New Open Economy Macroeconomics of Government Debt

Giovanni Ganelli

No 83, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: 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: F31 F41 H63 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (9)

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Journal Article: The new open economy macroeconomics of government debt (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:83

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