Fiscal Shocks and Helicopter Money in Open Economy

Giorgio Di Giorgio and Guido Traficante

No 1/18, Working Papers from Sapienza University of Rome, DISS

Abstract: We study the effects of expansionary fiscal shocks in a two-country DSGE model with perpetual youth. We consider two alternative financing regimes, monetary financing and debt financing, and find that a money-financed fiscal stimulus is more expansionary on output and infl ation. We investigate how the transmission mechanism is related to the open-economy dimension and how structural parameters affect macroeconomic dynamics.

Keywords: Exchange Rate; Fiscal Shocks; Helicopter Drop. (search for similar items in EconPapers)
JEL-codes: E32 E52 F41 F42 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-opm
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Citations: View citations in EconPapers (18)

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