Munich Personal RePEc Archive

The International Spillover of Fiscal and Technology Shocks before the Crisis: The case of the UK and Italy

Saeidinezhad, Elham (2014): The International Spillover of Fiscal and Technology Shocks before the Crisis: The case of the UK and Italy.

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Abstract

In this paper, we attempt to shed new light on the dynamic impacts of gov- ernment spending and technology shocks on the real exchange rate for the Euro area. The main idea under this identification scheme is to let the data speak about the behavior of the interested variables. Moreover, this paper investigates the impacts of fiscal policy and technology shock jointly in contrast to most of the literature which just focuses on one shock only. Our investigation suggests that the real exchange rate appreciates (falls) following an expansionary fiscal shock. It appreciates in response to a positive technology shock as well however after an on impact depreciation (increase) which lasts for 8 quarters.

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