Back to Search
Start Over
Government spending, the exchange rate and growth: empirical evidence for Latin America
- Source :
- Brazilian Journal of Political Economy, Vol 41, Iss 4, Pp 637-656 (2021)
- Publication Year :
- 2021
- Publisher :
- Editora 34, 2021.
-
Abstract
- ABSTRACT Using data of selected economies of Latin America for the period 1990-2017, this paper aims to provide empirical evidence regarding the effect of disaggregate government spending in the exchange rate. Our results indicate that government investment depreciates the exchange rate whereas government consumption, on the other hand, appreciates it. Both effects are, however, rather small. Our findings support recent literature showing that the relationship among government spending and the exchange rate is ambiguous, challenging the general accepted idea that government spending inevitably appreciates the exchange rate, having thus negative effects on the tradable sector and on growth. Overall, our results allow us to suggest that growth can be stimulated particularly via government investment without detrimental effects on the exchange rate.
Details
- Language :
- English, Portuguese
- ISSN :
- 18094538 and 01013157
- Volume :
- 41
- Issue :
- 4
- Database :
- Directory of Open Access Journals
- Journal :
- Brazilian Journal of Political Economy
- Publication Type :
- Academic Journal
- Accession number :
- edsdoj.f2aeedc8d6694c468f6d265efc20677c
- Document Type :
- article
- Full Text :
- https://doi.org/10.1590/0101-31572021-3030