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Fiscal policy and the real exchange rate: Some evidence from Spain

Oscar Bajo-Rubio (), Burcu Berke and Vicente Esteve
Additional contact information
Burcu Berke: Department of Economics, Nigde Ömer Halisdemir University, 51240 Nigde, Turkey
Vicente Esteve: Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia, Spain

No 1810, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: The factors influencing the real exchange rate are an important issue for a country’s price competitiveness, which is especially relevant to those countries belonging to a monetary union. In this paper, we analyse the relationship between fiscal policy and the real exchange rate for the case of Spain. In particular, we explore how changes in government spending, differentiating between consumption and investment, can affect the long-run evolution of the real exchange rate vis-à-vis the euro area. The distinction between two alternative definitions of the real exchange rate, based on consumption price indices and export prices, respectively, will also prove to be relevant for the results.

Keywords: Real exchange rate; Government consumption; Government investment (search for similar items in EconPapers)
JEL-codes: E62 F31 F41 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-eec, nep-mac and nep-opm
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http://repecsrv.uv.es/paper/RePEc/pdf/eec_1810.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Fiscal policy and the real exchange rate: some evidence from Spain (2020) Downloads
Working Paper: Fiscal policy and the real exchange rate: Some evidence from Spain (2014) Downloads
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