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Fiscal discipline and exchange rates : does politics matter?
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Orientador(es)
Resumo(s)
We look at the effect of exchange rate regimes on fiscal discipline, taking into account the effect of underlying political conditions. We present a model where strong politics (defined as policymakers facing longer political horizon and higher cohesion) are associated with better fiscal performance, but fixed exchange rates may revert this result and lead to less fiscal discipline. We confirm these hypotheses through regression analysis performed on a panel sample covering 79 countries from 1975 to 2012. Our empirical results also show that the positive effect of strong politics on fiscal discipline is not enough to counter the negative impact of being at/moving to fixed exchange rates. Our results are robust to a number of important sensitivity checks, including different estimators, alternative proxies for fiscal discipline, and sub-sample analysis.
Descrição
Palavras-chave
Fiscal discipline Deficit Political Economy Exchange Rates
Contexto Educativo
Citação
Jalles, João Tovar, Carlos Mulas-Granados e José Tavares (2019). "Fiscal discipline and exchange rates : does politics matter?". Instituto Superior de Economia e Gestão – REM Working paper nº 0103 - 2019
Editora
ISEG - REM - Research in Economics and Mathematics