The Change of Fiscal Multiplier when Switching from Managed Exchange Rate Regime to the Floating One

This study investigated the change of government spending multiplier when switching from managed exchange rate regime to the floating exchange rate regime for emerging countries. It was found that on-impact multiplier in floating exchange rate regime is smaller by 0.5 than the one in the managed exchange rate regime. In addition, it was found that the openness of the economy affects values of government spending multipliers. Also, for the first time, micro-founded government spending multiplier was estimated for Russia. The study was conducted with the use of panel SVAR and DSGE models