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International Aspects of Fiscal Policies

This volume brings together nine papers from a conference on international macroeconomics sponsored by the NBER in 1985. International economists as well as graduate students in the fields of global monetary economics, finance, and macroeconomics will find this an outstanding contribution to current research. It includes two commentaries for each paper, written by experts in the field, and Frenkel’s detailed introduction, which serves as a reader’s guide to the arguments made, the models employed, and the issues raised by each contributor.

The studies analyze national fiscal policies within the context of the international economic order. Malcolm D. Knight and Paul R. Masson use an empirical model to show that fiscal changes in recent years in the United States, West Germany, and Japan have caused major disturbances in net savings and investment flows. Linda S. Kole uses a two-country simulation model to examine the effects of a large nation’s expansion on exchange rates, interest rates, and the balance of payments. In other studies, Warwick J. McKibbin and Jeffrey D. Sachs discuss the influences of different currency regimes on the international transmission of inflation; Kent P. Kimbrough analyzes the interaction between optimal tax policies and international trade; Sweder van Wijnbergen investigates the interrelation of fiscal policies, trade intervention, and world interest rates; and Willem H. Buiter uses an analytical model to look at fiscal interdependence and optimal policy design. David Backus, Michael Devereux, and Douglas Purvis develop a theoretical model to investigate effects of different fiscal policies in an open economy. Alan C. Stockman looks at the influence of policy anticipation in the private sector, while Lawrence H. Summers shows the effects of differential tax policy on international competitiveness.

Table of Contents

1. An Introduction to International Aspects of Fiscal Policies
Jacob A. Frenkel
2. Fiscal Policies, Net Saving, and Real Exchange Rates: The United States, the Federal Republic of Germany, and Japan
Malcolm D. Knight and Paul R. Masson
Comment: Olivier Jean Blanchard
Comment: Rudiger Dornbusch
3. Coordination of Monetary and Fiscal Policies in the Industrial Economies
Warwick J. McKibbin and Jeffrey D. Sachs
Comment: William H. Branson
Comment: Robert P. Flood
4. Macroeconomic Policy Design in an Interdependent World Economy: An Analysis of Three Contingencies
Willem H. Buiter
Comment: Maurice Obstfeld
Comment: Stephen J. Turnovsky
5. A Positive Theory of Fiscal Policy in Open Economies
David Backus, Michael Devereux, and Douglas Purvis
Comment: Stanley Fischer
Comment: Kenneth Rogoff
6. Fiscal Policies and International Financial Markets
Alan C. Stockman
Comment: Andrew B. Abel
Comment: Patrick J. Kehoe
7. Expansionary Fiscal Policy and International Interdependence
Linda S. Kole
Comment: Robert J. Hodrick
Comment: Alessandro Penati
8. Fiscal Policy, Trade Intervention, and World Interest Rates: An Empirical Analysis
Sweder van Wijnbergen
Comment: Guillermo A. Calvo
Comment: John T. Cuddington
9. Optimal Tax Policy for Balance of Payments Objectives
Kent P. Kimbrough
Comment: Joshua Aizenman
Comment: Robert G. Murphy
10. Tax Policy and International Competiveness
Lawrence H. Summers
Comment: Jeffrey A. Frankel
Comment: Roger H. Gordon
Author Index
Subject Index

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