A Dependent Economy Model of Employment, Real Exchange Rate and Debt Dynamics: Towards an Understanding of Pandemic Crisis

IF 1.1 Q4 BUSINESS

Foreign Trade Review Pub Date : 2021-11-13 DOI:10.1177/00157325211048018

Moumita Basu, Rilina Basu, Ranjanendra Narayan Nag

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引用次数: 3

Abstract

Given the unforeseen and uncertain circumstances during the pandemic, the role of government expenditure becomes extremely relevant in sustaining lives and livelihoods of the masses. This brings forth public sector deficit as a key issue of macroeconomic policy debate. This article aims at investigating the effects of an unanticipated adverse shock like COVID-19, on the real value of public debt, in a small open economy, consisting of traded and non-traded sectors, along with proposed management of such crisis with fiscal and monetary expansion. The results of policy-induced and exogenous shocks depend on the difference in the speeds of adjustments in real exchange rate, interest rate and real value of debt, and the associated multitudes of cross effects. While an unanticipated adverse shock like COVID-19 causes contraction of both traded and non-traded sectors and reduces consumption expenditure, investment expenditure and level of employment and real value of aggregate income in the short run, fiscal expansion causes higher real value of debt and lower real exchange rate. JEL Codes: E12, E62, H63

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就业、实际汇率和债务动态的依赖经济模型:对流行病危机的理解

鉴于大流行期间不可预见和不确定的情况，政府支出在维持群众生命和生计方面的作用变得极其重要。这使得公共部门赤字成为宏观经济政策辩论的一个关键问题。本文旨在研究在一个由贸易和非贸易部门组成的小型开放经济体中，COVID-19等意外不利冲击对公共债务实际价值的影响，以及通过财政和货币扩张来管理此类危机的建议。政策引发的冲击和外生冲击的结果取决于实际汇率、利率和债务实际价值调整速度的差异，以及相关的多重交叉效应。虽然像COVID-19这样的意外不利冲击会导致贸易和非贸易部门的收缩，并在短期内减少消费支出、投资支出、就业水平和总收入的实际价值，但财政扩张会导致债务的实际价值上升和实际汇率下降。JEL代码:E12, E62, H63

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来源期刊

Foreign Trade Review Multiple-

CiteScore

2.50

自引率

23.10%

发文量