Government spending, the exchange rate and growth: empirical evidence for Latin America
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 gove...
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| Format: | Article |
| Language: | English |
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Editora 34
2021-11-01
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| Series: | Brazilian Journal of Political Economy |
| Subjects: | |
| Online Access: | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572021000400637&tlng=en |
| _version_ | 1818719445351137280 |
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| author | MORITZ CRUZ JOSUE ZAVALETA |
| author_facet | MORITZ CRUZ JOSUE ZAVALETA |
| author_sort | MORITZ CRUZ |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-12-17T20:07:03Z |
| format | Article |
| id | doaj.art-f2aeedc8d6694c468f6d265efc20677c |
| institution | Directory Open Access Journal |
| issn | 1809-4538 |
| language | English |
| last_indexed | 2024-12-17T20:07:03Z |
| publishDate | 2021-11-01 |
| publisher | Editora 34 |
| record_format | Article |
| series | Brazilian Journal of Political Economy |
| spelling | doaj.art-f2aeedc8d6694c468f6d265efc20677c2022-12-21T21:34:18ZengEditora 34Brazilian Journal of Political Economy1809-45382021-11-0141463765610.1590/0101-31572021-3030Government spending, the exchange rate and growth: empirical evidence for Latin AmericaMORITZ CRUZhttps://orcid.org/0000-0002-3771-8302JOSUE ZAVALETAhttps://orcid.org/0000-0002-5171-9280ABSTRACT 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.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572021000400637&tlng=enGovernment spendingexchange rateindustrial policygrowth and developmentLatin America |
| spellingShingle | MORITZ CRUZ JOSUE ZAVALETA Government spending, the exchange rate and growth: empirical evidence for Latin America Brazilian Journal of Political Economy Government spending exchange rate industrial policy growth and development Latin America |
| title | Government spending, the exchange rate and growth: empirical evidence for Latin America |
| title_full | Government spending, the exchange rate and growth: empirical evidence for Latin America |
| title_fullStr | Government spending, the exchange rate and growth: empirical evidence for Latin America |
| title_full_unstemmed | Government spending, the exchange rate and growth: empirical evidence for Latin America |
| title_short | Government spending, the exchange rate and growth: empirical evidence for Latin America |
| title_sort | government spending the exchange rate and growth empirical evidence for latin america |
| topic | Government spending exchange rate industrial policy growth and development Latin America |
| url | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572021000400637&tlng=en |
| work_keys_str_mv | AT moritzcruz governmentspendingtheexchangerateandgrowthempiricalevidenceforlatinamerica AT josuezavaleta governmentspendingtheexchangerateandgrowthempiricalevidenceforlatinamerica |