The limited role of fiscal policy in an open economy
DOI:
https://doi.org/10.13133/2037-3643/11495Keywords:
Open economy, model of fiscal policy, labor market, exchange rates, fixed, flexibleAbstract
The paper imposes the workings of the labor market on open-economy models of fiscal policy under fixed and under flexible exchange rates. The author then reexamines the conventional conclusion that fiscal policy is fully effective under fixed rates, but is fully offset under floating rates. For this purpose “fiscal policy” is an increase in government expenditures or a reduction in taxation covered by the issue of non-monetary debt that either domestic nationals or foreigners are eligible to buy.
JEL: E62, E42
Downloads
Published
2014-01-03
How to Cite
MCKINNON, R. (2014). The limited role of fiscal policy in an open economy. PSL Quarterly Review, 29(117). https://doi.org/10.13133/2037-3643/11495
Issue
Section
Editorial
License

All material in this website and every article published by the Review are licensed under a Creative Commons Attribution - Non commercial - No derivates 4.0 International license.
The authors who publish on this journal maintain all rights on their works without any restrictions.