scholarly journals Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate

2007 ◽  
Author(s):  
Morten Ravn ◽  
Stephanie Schmitt-Grohé ◽  
Martín Uribe
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Government Spending ◽  
The Real ◽  
Spending Shocks

Consumption, government spending, and the real exchange rate

2012 ◽  
Vol 59 (3) ◽  
pp. 215-234 ◽  
Author(s):  
Morten O. Ravn ◽  
Stephanie Schmitt-Grohé ◽  
Martín Uribe
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Government Spending ◽  
The Real

Fiscal shocks, the real exchange rate and the trade balance: some evidence for emerging economies

2015 ◽  
Vol 15 (2) ◽  
Author(s):  
Marcelo Eduardo Alves da Silva ◽  
Diogo Baerlocher ◽  
Henrique Veras de Paiva Fonseca
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Emerging Economies ◽  
Government Spending ◽  
Trade Balance ◽  
The Real ◽  
Vector Auto Regression ◽  
Auto Regression ◽  
Structural Vector ◽  
Fiscal Shocks

AbstractThis paper implements a structural vector auto regression (SVAR) analysis to investigate the impacts and importance of fiscal shocks on the dynamics of the real exchange rate and the trade balance in three emerging economies: Brazil, Chile and Mexico. We show that the effects of an unexpected increase in government spending are not uniform across countries with higher spending leading to a depreciation of the real exchange rate in Brazil and Chile, whereas in Mexico, we observe an appreciation. The trade balance deteriorates in all three countries. We also report that an unexpected increase in taxes leads to recessionary impacts and improves the trade balance. Only in Mexico is there evidence of a real exchange rate depreciation. Finally, we show that fiscal shocks account for roughly 20% of real exchange fluctuations.

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