Fiscal Policy, Capital Accumulation, and Debt in an Open Economy

Stephen J Turnovsky and Partha Sen

No 3489, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the effects of changes in government expenditures on both a domestically produced and an imported good in an open economy based on intertemporal optimizing behavior. The dynamic adjustment is characterized in detail and the critical role played by the accumulating capital stock is highlighted. The evolution of the current account is seen to mirror that of capital. The welfare of such policies is also assessed in tans of the intertemporal utility of the representative agent. Both permanent and temporary policy changes are considered, with the latter being shown to have a permanent effect on the economy.

Date: 1990-10
Note: ITI IFM
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Citations: View citations in EconPapers (25)

Published as Oxford Economic Papers, Vol. 43, No. 1, pp. 1-24, March 1991.

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Related works:
Journal Article: Fiscal Policy, Capital Accumulation, and Debt in an Open Economy (1991)
Working Paper: FISCAL POLICY, CAPITAL ACCUMULATION, AND DEBT IN AN OPEN ECONOMY (1990)
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