search query: @indexterm Exchange rates / total: 1242
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| Author: | Monacelli, T. Perotti, R. |
| Title: | Fiscal policy, the real exchange rate and traded goods |
| Journal: | Economic Journal
2010 : MAY, VOL 120:544 p. 437-461 |
| Index terms: | consumption public expenditure public sector exchange rates OECD USA |
| Freeterms: | CPI |
| Language: | eng |
| Abstract: | This article estimates the effects of government spending shocks on the CPI real exchange rate, the trade balance and their co-movements with GDP and private consumption. The variations of the CPI real exchange rate is decomposed into variations of the traded goods real exchange rate and the relative price of traded to non-traded goods. Three main conclusions are reached: a rise in government spending induces a depreciation of the CPI real exchange rate and a trade balance deficit; private consumption rises in response to a government spending shock and therefore co-moves positively with the real exchange rate; both components of the CPI exchange depreciate. |
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