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Title:Capital Mobility and the Effectiveness of Fiscal Policy in Open Economies PDF Logo
Authors:Pierdzioch, Christian
Issue Date:2003
Series/Report no.:Kieler Arbeitspapiere 1164
Abstract:This paper uses a dynamic general equilibrium two-country optimizing ?new-open economy macroeconomics? model to analyze the consequences of international capital mobility for the effectiveness of fiscal policy. Conventional wisdom suggests that higher capital mobility diminishes the effectiveness of fiscal policy. The model laid out in this paper provides an example that a higher degree of capital mobility can also increase the effectiveness of fiscal policy. This tends to be the case if the stance of monetary policy can be described by means of a simple monetary policy rule.
Subjects:Fiscal policy
Capital mobility
Financial market integration
Monetary Policy
JEL:F36
F41
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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