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Spillovers from US Government Spending Shocks
Impact on External Positions
ISBN 9781484320259
Publication year: 2017

Cdn: $6.50; US: $4.99
Language: English
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This note analyzes the impact of preannounced government spending shocks in the United States on the real effective exchange rate and the trade balance. Using a vector auto-regression framework that allows anticipated fiscal shocks to be identified using survey information, we find that preannounced spending shocks lead to a sizable real effective dollar appreciation and a worsening of both the aggregate trade balance and bilateral trade balances in a panel of partner countries. The results are robust to controlling for country-specific variables like the macroeconomic and policy conditions in the recipient countries, are generalized across regions and might have decreased during the zero-interest-lower-bound regime.
Spillovers from US Government Spending Shocks
Cdn: $6.50; US: $4.99
International Monetary Fund (IMF) BookID: 123046 Added: 2018.6.30