TY  - BOOK
AU  - Makin, Anthony J. 
TI  - The policy (in)effectiveness of government spending in a dependent economy
SN  - 17487870
AV  - HD1918 
PY  - 2013///
CY  - Oxfordshire  
PB  - Taylor and Francis 
KW  - Government spending
KW  - Dependent economy
KW  - Policy effectiveness
N2  - This paper analyses the policy effectiveness of government spending in a two-sector open economy whose output and expenditure is comprised of tradables and non-tradables. This framework reveals that government spending on either tradables or, more normally, on non-tradables widens the external deficit, yet how the real exchange rate behaves depends, in the first instance, on in which sector the public spending occurs. It also shows that, irrespective of where government spending falls, there appears to be no significant short run boost to overall output and hence employment a priori, although empirically actual impact would depend on the elasticities of tradable and non-tradable output with respect to the real exchange rate. Furthermore, fiscal stimulus is shown to be unambiguously ineffective if deemed unsustainable by foreign lenders, or implemented under a fixed exchange rate regime with limited capital mobility
UR  - http://dx.doi.org/10.1080/17487870.2013.812937
ER  -