Bank of Colombia paper charts fiscal multipliers in developing countries
Stronger fiscal-monetary co-ordination in developing economies during periods of expansion would extract more value from stimulus
Research published by the Central Bank of Colombia finds fiscal multipliers in developing economies may increase if central banks delay rate rises during periods of fiscal expansion.
In emerging countries, multipliers are found to be higher in fixed exchange rate regimes, during economic booms and monetary expansions. Countries with a floating exchange rate could enjoy bigger benefits by enhancing fiscal-monetary policy co-ordination, the authors say.
In fixed regimes, the GDP response is
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