Title Real exchange rate appreciation in emerging markets : can fiscal policy help? / prepared by Marialuz Moreno Badia and Alex Segura-Ubiergo

Published [Washington, D.C.] : International Monetary Fund, ©2014

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Description 1 online resource (23 pages) Series IMF working paper, 2227-8885 ; WP/14/1 IMF working paper ; WP/14/1. Contents Cover; Contents; I. Introduction; Figures; 1. Emerging Markets: Real Effective Exchange Rate Appreciation; 2. Emerging Markets: Effective Exchange Rate Appreciation, 2002-12; II. Literature Review; III. Econometric Evidence; A. Methodology; B. Results; 3. Composition of Government Spending; C. Implications for Brazil; 4. Emerging Markets: Fiscal Performance; 5. Emerging Markets: Composition of Government Spending; 6. Brazil: Simulation Analysis; Box; 1. Budget Rigidities in Brazil; IV. Conclusions; Table; 1. Real Effective Exchange Rate: Long-Run Estimates; Appendix; I. Data; References Summary "A number of emerging markets have experienced substantial real exchange rate appreciation in recent years, generating concerns about competitiveness and prompting policymakers to respond with a combination of mitigating policies. This paper shows that fiscal policy can play a role in alleviating these pressures. Using a sample of 28 emerging market economies over 1983-2011, we estimate a dynamic model of the real exchange rate and find that a permanent fiscal adjustment may reduce appreciation pressures over the long term. Furthermore, the composition of public spending matters, with reductions in current spending playing a key role. To illustrate the importance of these findings, the paper focuses on the case of Brazil. Our results suggest that maintaining fiscal discipline while increasing public investment in Brazil is likely to ease real appreciation pressures, highlighting the importance of tackling long-standing budget rigidities"--Abstract Notes At head of title: Fiscal Affairs Department "January 2014." Bibliography Includes bibliographical references Notes Online resource; title from pdf title page (IMF.org Web site, viewed January 16, 2014) Subject Foreign exchange rates -- Developing countries -- Econometric models Foreign exchange rates -- Brazil -- Econometric models Fiscal policy -- Developing countries -- Econometric models Fiscal policy -- Brazil -- Econometric models Consumption (Economics) -- Developing countries -- Econometric models Consumption (Economics) -- Brazil -- Econometric models Public investments -- Developing countries -- Econometric models Public investments -- Brazil -- Econometric models Consumption (Economics) -- Econometric models Fiscal policy -- Econometric models Foreign exchange rates -- Econometric models Public investments -- Econometric models Brazil Developing countries Form Electronic book Author Segura-Ubiergo, Alex, author. International Monetary Fund. Fiscal Affairs Department, issuing body. ISBN 1475516819 9781475516814

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