Fiscal Policy. Locational Decisions, and Exchange Rates

International Monetary Fund

No 1989/049, IMF Working Papers from International Monetary Fund

Abstract: The paper distinguishes between three different channels through which fiscal policy changes may be transmitted to exchange rates. Based on both the balance of payments identity and empirical observations, it is argued that trade balances and exchange rates may be quite responsive to changes in the relative attractiveness of locating production facilities or storing other “taxable” forms of wealth in different countries. Recognition that fiscal policy has a major influence on asset location decisions may thus be very important for understanding the behavior of exchange rates.

Keywords: WP; nominal exchange rate; income; capital; home currency price; fiscal policy change; physical capital; exchange rate movement; foreign exchange value; price level; Exchange rates; Personal income; Currencies; Real exchange rates (search for similar items in EconPapers)
Pages: 36
Date: 1989-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=30384 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1989/049

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().