Publication
May 2003
This paper analyzes the consequences of international capital mobility for the effectiveness of fiscal policy using a dynamic equilibrium two-country optimizing the 'new-open economy macroeconomics' model. Despite conventional wisdom suggesting that higher capital mobility diminishes the effectiveness of fiscal policy, the author shows that it can also increase it. He holds that this tends to be the case if the stance of monetary policy can be described by means of a simple monetary policy rule.
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English (PDF, 27 pages, 320 KB) |
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Author | Christian Pierdzioch |
Series | Kiel Institute Working Papers |
Issue | 1164 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2003 Kiel Institute for the World Economy |