Fiscal Policy, Relative Prices, and Net Exports in a Currency Union

• 成果类型: Article
• 署名作者: Lambertini, Luisa; Proebsting, Christian
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20200470
• 发表日期: 2023
• 页码: 371-410
• 关键词: real exchange-rate; Government spending multipliers; current account; euro-area; TRADE; LABOR; shocks; DYNAMICS; rates; consumption

摘要

The hoped-for silver lining of euro-area austerity programs was to raise external competitiveness and improve current accounts. Using product-and industry-level data for 12 countries over the period 1999-2018, we show that reductions in government spending reduce prices and wages but only for products with low import content and industries with low export shares. This leads to asymmetric expen-diture switching, with net exports improving through lower imports rather than higher exports. The standard small-open-economy model fails to rationalize these findings, but home bias in govern-ment spending and frictions preventing factor prices from equal-izing across sectors considerably improve the fit of the model. (JEL E31, E62, F14, F33, F45, H20, H50)