Data and code for: Fiscal Policy, Relative Prices and Net Exports in a Currency Union
Principal Investigator(s): View help for Principal Investigator(s) Luisa Lambertini, EPFL; Christian Proebsting, EPFL
Version: View help for Version V1
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Project Description
Summary:
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This is data and code to replicate the paper. The abstract of the paper as follows:
The hoped-for silver lining of euro-area austerity programs was to raise external competitiveness and improve current accounts. Using product- and industry-level data for 12 countries over 1999-2018, we show that reductions in government spending reduce prices and wages, but only for products with low import content and industries with low export shares. This leads to asymmetric expenditure switching, with net exports improving through lower imports rather than higher exports. The standard small-open-economy model fails to rationalize these findings, but home bias in government spending and frictions preventing factor prices from equalizing across sectors, considerably improves the fit of the model.
The hoped-for silver lining of euro-area austerity programs was to raise external competitiveness and improve current accounts. Using product- and industry-level data for 12 countries over 1999-2018, we show that reductions in government spending reduce prices and wages, but only for products with low import content and industries with low export shares. This leads to asymmetric expenditure switching, with net exports improving through lower imports rather than higher exports. The standard small-open-economy model fails to rationalize these findings, but home bias in government spending and frictions preventing factor prices from equalizing across sectors, considerably improves the fit of the model.
Scope of Project
Subject Terms:
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Spending multipliers;
currency union;
current account
JEL Classification:
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E62 Fiscal Policy
F41 Open Economy Macroeconomics
F45 Macroeconomic Issues of Monetary Unions
E62 Fiscal Policy
F41 Open Economy Macroeconomics
F45 Macroeconomic Issues of Monetary Unions
Geographic Coverage:
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Euro area
Data Type(s):
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aggregate data
Methodology
Unit(s) of Observation:
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country,
industry
Related Publications
Published Versions
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