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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/270

Title: Fiscal policy and exchange rates
Authors: Annicchiarico, Barbara
Keywords: exchange rates
fiscal deficits
current account dynamics
Issue Date: Oct-2002
Publisher: CEIS
Series/Report no.: Quaderni CEIS; 174
Abstract: This paper examines the dynamics of the nominal exchange rate and fiscal deficits in a continuous time optimising general equilibrium model with finite horizon. It is shown that alternative financing modes of budget deficits imply different patterns of adjustment along the transitional path towards the steady state equilibrium. Fiscal policy may provide the nominal anchor for the exchange rate and the respect of public solvency without money financing is not sufficient to avoid the depreciation of the exchange rate in the long-run after a fiscal expansion.
URI: http://hdl.handle.net/2108/270
Appears in Collections:Quaderni

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