The Effects of Government Spending Under Limited Capital Mobility /

This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fi...

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Autor principal: Shen, Wenyi
Altres autors: Yang, Susan
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 2012.
Col·lecció:IMF Working Papers; Working Paper ; No. 2012/129
Accés en línia:Full text available on IMF
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245 1 4 |a The Effects of Government Spending Under Limited Capital Mobility /  |c Wenyi Shen, Susan Yang. 
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300 |a 1 online resource (41 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fiscal multiplier in the short run. The decline of the multiplier is larger when facing debt-elastic country risk premia. Also, government spending is more expansionary with more home bias in government purchases, more sectoral rigidities, and a less flexible exchange rate. Whether the twin-deficit hypothesis holds depends crucially on the extent to which government deficits are financed externally. 
538 |a Mode of access: Internet 
700 1 |a Yang, Susan. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2012/129 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2012/129/001.2012.issue-129-en.xml  |z IMF e-Library