The Real Exchange Rate, National Income and the Efficacy of Macropolicy

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Title The Real Exchange Rate, National Income and the Efficacy of Macropolicy
Author Makin, Anthony John
Publication Title Proceedings of the Australian Conference of Economists, 2005
Editor J. Freebairn
Year Published 2005
Place of publication Melbourne
Publisher ACE
Abstract This paper yields new results about the effectiveness of fiscal and monetary policy under both fixed and floating exchange rate regimes. Contrary to accepted theory, yet consistent with recent empirical evidence, it predicts that fiscal consolidation in the form of reduced public consumption strengthens the nominal exchange rate and national income. Alternatively, fiscal expansion in the form of productivity enhancing infrastructure spending can generate current account deficits and appreciate the exchange rate while raising national income. It also shows that exchange rate choice becomes less pivotal in determining the impact of fiscal and monetary policies the more immediate is exchange rate passthrough to the domestic price level.
Peer Reviewed Yes
Published Yes
Publisher URI
Copyright Statement Copyright 2005 Economic Society of Australia QLD Inc. This is the author-manuscript version of this paper. Reproduced in accordance with the copyright policy of the publisher.
ISBN 07340-26080
Conference name Australian Conference of Economists 2005
Location Melbourne
Date From 2005-09-26
Date To 2005-09-28
Date Accessioned 2006-02-28
Date Available 2014-12-04T03:50:55Z
Language en_US
Faculty Griffith Business School
Subject PRE2009-Labour Economics
Publication Type Conference Publications (Full Written Paper - Refereed)
Publication Type Code e1

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