Capital mobility and the effectiveness of fiscal policy in open economies
AbstractThis paper uses a dynamic general equilibrium two-country optimizing Ãânew-open economy macroeconomicsÃâ model to analyze the consequences of international capital mobility for the effectiveness of fiscal policy. Conventional wisdom suggests that higher capital mobility diminishes the effectiveness of fiscal policy. The model laid out in this paper provides an example that a higher degree of capital mobility can also increase the effectiveness of fiscal policy. This tends to be the case if the stance of monetary policy can be described by means of a simple monetary policy rule.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 26 (2004)
Issue (Month): 3 (September)
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Web page: http://www.elsevier.com/locate/inca/622617
Other versions of this item:
- Christian Pierdzioch, 2003. "Capital Mobility and the Effectiveness of Fiscal Policy in Open Economies," Kiel Working Papers 1164, Kiel Institute for the World Economy.
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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