The effects of government spending on real exchange rates: Evidence from military spending panel data

Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate

Using panel structural VAR analysis and quarterly data from four industrialized countries, we document that an increase in government purchases leads to an expansion in output and private consumption, a deterioration in the trade balance, and a depreciation of the real exchange rate (i.e., a decrease in the domestic CPI relative to the exchange-rate adjusted foreign CPI). We propose an explanat...

The Effects of Government Spending on the Distribution of Consumption

This paper proposes an empirical framework to study the effects of a policy regime change defined as an unpredictable and permanent change in the policy parameters. In particular I show how to make conditional forecast and perform impulse response functions and counterfactual analysis. As an application, the effects of changes in fiscal policy rules in the US are investigated. I find that discr...

The Politics of Military Spending

Understanding the dynamic effects of government spending on foreign trade

Using Vector Autoregressions on U.S. time series, the present paper documents the effects of fiscal policy on foreign trade: an increase in government spending significantly depreciates the nominal exchange rate, appreciates the terms of trade and increases net exports. Exposed to the same spending shock, a New Keynesian general equilibrium model is shown to match qualitatively the response of ...

Effects of Government Spending on Research Workforce Development: Evidence from Biomedical Postdoctoral Researchers

We examine effects of government spending on postdoctoral researchers' (postdocs) productivity in biomedical sciences, the largest population of postdocs in the US. We analyze changes in the productivity of postdocs before and after the US government's 1997 decision to increase NIH funding. In the first round of analysis, we find that more government spending has resulted in longer postdoc care...