Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319967 
Year of Publication: 
2014
Series/Report no.: 
CASMEF Working Paper Series No. WP 2014/01
Publisher: 
LUISS Guido Carli, Department of Economics and Business, Arcelli Centre for Monetary and Financial Studies, Rome
Abstract: 
This paper shows that the result implied by the Redux model of Obstfeld and Rogoff (1995) - that the exchange rate depreciates in response to balanced-budget fiscal expansions - is completely reversed once we account for two key features of modern New Open Economy Macroeconomics models: home bias in public consumption and endogenous monetary policy.
Subjects: 
Redux Model
Exchange Rate
Fiscal Shocks
Endogenous Monetary and Fiscal Policy
JEL: 
E43
E44
E50
E52
Document Type: 
Working Paper

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