The Impact of Fixed Exchange Rates on Fiscal Discipline

摘要

Abstract In this paper, it is shown that contrary to standard arguments, fiscal discipline is not substantially enhanced by a fixed exchange rate regime. This study is based on data from 116 countries collected from 1975 to 2004, and uses various estimation techniques for dynamic panel data, in particular a generalized method of moments estimation in the tradition of Arellano and Bover [Journal of Econometrics (1995), 68, 29] and Blundell and Bond [Journal of Econometrics (1998), 87, 115]. Contrary to previous papers on this topic, the present paper takes into account that the consequences of a new exchange rate regime do not necessarily fully manifest immediately.

关键词