Citation

Discussion Paper Details

Please find the details for DP322 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: On Fiscal Policies, External Imbalances and Fundamental Equilibrium Exchange Rates

Author(s): George Alogoskoufis

Publication Date: June 1989

Keyword(s): Exchange Rates, Fiscal Policy, Inflation and Unemployment

Programme Area(s): International Macroeconomics

Abstract: This paper presents an investigation of the relationship between fiscal policies, fundamental equilibrium real exchange rates and misalignments under fixed nominal exchange rate regimes like those proposed by McKinnon and supply-side fiscal policy. The medium-run effects operate mainly through the accumulation or decumulation of external assets. The analysis suggests that even temporary shifts in fiscal policy have permanent effects on fundamental equilibrium exchange rates and the natural rate of unemployment. In addition, because of differential inflation across countries, real exchange rates become misaligned in the short-run.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=322

Bibliographic Reference

Alogoskoufis, G. 1989. 'On Fiscal Policies, External Imbalances and Fundamental Equilibrium Exchange Rates'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=322