Article ID Journal Published Year Pages File Type
964168 Journal of International Money and Finance 2011 15 Pages PDF
Abstract

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.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
, , ,