Description |
1 online resource (41 pages) : illustrations |
Series |
IMF working paper ; WP/12/129 |
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IMF working paper ; WP/12/129
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Contents |
Cover; Contents; I. Introduction; II. Model Setup; A. Households; B. Firms; C. The Government; D. Reserve and Monetary Policy; E. Aggregation and Some Identities; III. Equilibrium, Solution, and Calibration; IV. Government Spending Effects and External Financing; A. Without External Financing; B. With External Financing; C. Twin Deficit Hypothesis; V. Other Country Characteristics; A. Composition of Government Purchases; B. Sectoral Rigidities of Production Factors; C. Fraction of Hand-to-Mouth Households; D. The Exchange Rate Regime; E. Capital Account Openness |
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F. Interactions with External FinancingVI. Conclusions; Tables; 1. Steady State; 2. Baseline Calibration; 3. Fiscal Multipliers for Government Spending; Figures; 1. Impulse Responses to a 10-Percent Increase in Government Spending: Baseline Calibration; 2. Impulse Responses to a 10-Percent Increase in Government Spending: Country Premium; 3. Impulse Responses to a 10-Percent Increase in Government Spending: Twin Deficits; 4. Impulse Responses to a 10-Percent Increase in Government Spending: Home Bias in Government Purchases |
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5. Impulse Responses to a 10-Percent Increase in Government Spending: Capital Account Openness6. Interactions with External Financing; Appendix; References |
Summary |
This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fiscal multiplier in the short run. The decline of the multiplier is larger when facing debt-elastic country risk premia. Also, government spending is more expansionary with more home bias in government purchases, more sectoral rigidities, and a less flexible exchange rate. Whether the twin-deficit hypothesis holds depends crucially on the extent to which government deficits are financed externally |
Notes |
Title from PDF title page (IMF Web site, viewed May 30, 2012) |
Bibliography |
Includes bibliographical references |
Notes |
"Research Department." |
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"May 2012." |
Subject |
Government spending policy -- Developing countries -- Econometric models
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Fiscal policy -- Developing countries -- Econometric models
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Multiplier (Economics) -- Econometric models
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Fiscal policy -- Econometric models
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Government spending policy -- Econometric models
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Developing countries
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Form |
Electronic book
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Author |
Yang, Shu-Chun Susan, 1971- author
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International Monetary Fund. Research Department, issuing body
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ISBN |
9781475503661 |
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1475503660 |
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