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Title:Fiscal shocks and real exchange rate dynamics: some evidence for Latin America PDF Logo
Authors:Caporale, Guglielmo Maria
Ciferri, Davide
Girardi, Alessandro
Issue Date:2008
Series/Report no.:CESifo working paper 2228
Abstract:This paper analyses the effects of fiscal shocks using a two-country macroeconomic model for output, labour input, government spending and relative prices which provides the orthogonality restrictions for obtaining the structural shocks. Dynamic simulation techniques are then applied, in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate in the case of six Latin American countries. 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.
Subjects:fiscal shocks
real exchange rate
Latin American countries
JEL:C32
E62
O54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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