TY  - BOOK
AU  - Aloy,Marcel
AU  - Aloy,Marcel
AU  - Moreno-Dodson,Blanca
AU  - Nancy,Gilles
TI  - Intertemporal Adjustment and Fiscal Policy Under A Fixed Exchange Rate Regime
PY  - 2008///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Currencies and Exchange Rates
KW  - Currency
KW  - Currency board
KW  - Debt Markets
KW  - Economic Stabilization
KW  - Economic Theory and Research
KW  - Emerging Markets
KW  - Finance and Financial Sector Development
KW  - Fiscal Policy
KW  - Fixed Exchange Rate
KW  - Fixed Exchange Rate Regime
KW  - Macroeconomic stability
KW  - Macroeconomics and Economic Growth
KW  - Monetary policy
KW  - Open economies
KW  - Poverty Reduction
KW  - Private Sector Development
KW  - Real exchange rate
N2  - The paper presents a dynamic model for small to medium open economies operating under a fixed exchange rate regime. The model provides a partial explanation of the channels through which fiscal and monetary policy affects the real exchange rate. An empirical investigation is conducted for the case of Argentina during the currency board period of 1991-2001. Empirical estimates show that fiscal policy may indeed be an efficient instrument for promoting macroeconomic stability insofar as it encourages convergence toward long-run equilibrium and alters the long-term balance between exports and consumption, both private and public. The simulation applied to Argentina shows that if the share of public spending in the economy is higher than the share of imports, an increase in the tax rate will stimulate capital stock slightly, at least in the short term, and depreciate the real effective exchange rate. In the long run, the fiscal policy affects the value of the real exchange rate and consequently external competitiveness
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-4607
ER  -