Fiscal shocks and real exchange rate dynamics: Some evidence for Latin America

This paper analyses the effects of fiscal shocks in selected Latin American countries using a two-country model for output, labour input, government spending and relative prices. Dynamic simulation techniques are then applied, in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate. Using quarterly data over the period 1980-2006, we find that in a majority of cases fiscal shocks are the main driving force of real exchange rate fluctuations.

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Year of publication:	2011
Authors:	Caporale, Guglielmo Maria ; Ciferri, Davide ; Girardi, Alessandro
Published in:	Journal of International Money and Finance. - Elsevier, ISSN 0261-5606. - Vol. 30.2011, 5, p. 709-723
Publisher:	Elsevier
Keywords:	Fiscal shocks Real exchange rate Latin American countries

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009195008