The effects of government spending on real exchange rates: Evidence from military spending panel data

• 成果类型: Article
• 署名作者: Miyamoto, Wataru; Thuy Lan Nguyen; Sheremirov, Viacheslav
• 署名单位: University of Hong Kong; Santa Clara University; Federal Reserve System - USA; Federal Reserve Bank - Boston
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2018.11.009
• 发表日期: 2019
• 页码: 144-157
• 关键词: Military spending; fiscal policy; Real exchange rates; Twin deficit; risk sharing

摘要

Using panel data on military spending for 125 countries, we document new facts about the effects of changes in government purchases on the real exchange rate, consumption, and current accounts in both advanced and developing countries. While an increase in government purchases causes real exchange rates to appreciate and increases consumption significantly in developing countries, it causes real exchange rates to depreciate and decreases consumption in advanced countries. The current account decreases in both groups of countries. These findings are not consistent with standard international business cycle models. We discuss potential sources of the differences between advanced and developing countries in the responses to spending shocks. (C) 2018 Elsevier B.V. All rights reserved.