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Page 1: Indian Journal of Applied Economics and Business ARF INDIA …arfjournals.com/abstract/25546_1_yu_hsing.pdf · 2020. 5. 9. · Indian Journal of Applied Economics and Business Vol.

Joseph H. Miller Endowed Professor in Business, Professor of Economics,Department of Management & Business Administration, College of Business

Southeastern Louisiana University, Hammond, Louisiana 70402, USAE-mail: [email protected]

Received: 14 January 2020; Revised: 6 February 2020;Accepted: 23 March 2020; Publication: 16 April 2020

Abstract: Applying an extended IS-LM model, this study finds that fiscal expansionraises output and causes real appreciation and that monetary expansion increases outputand causes real depreciation. In addition, a lower real interest rate or a higher real stockprice increases output, and a lower real interest rate or a higher real stock price causesreal appreciation. Therefore, except for the positiveimpact of fiscal expansion on output,the Mundell-Fleming model applies to China.

fiscal expansion, monetary expansion, exchange rates, Mundell-Flemingmodel

E52, E62, F41

Indian Journal of Applied Economics and BusinessVol. 2, No. 1, 2020, pp. 1-11

ARF INDIAAcademic Open Access Publishingwww. arfjournals. com

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Effectiveness of Fiscal and Monetary Policies on Output and the Exchange Rate in China 3

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4 Yu Hsing

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Effectiveness of Fiscal and Monetary Policies on Output and the Exchange Rate in China 5

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Effectiveness of Fiscal and Monetary Policies on Output and the Exchange Rate in China 7

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Effectiveness of Fiscal and Monetary Policies on Output and the Exchange Rate in China 9

Log Log(real GDP) (REER)

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Palgrave Communications,

The QuarterlyReview of Economics and Finance,

International Monetary Fund Staff Papers

Economic Modelling,

China Economic Journal,

Journalof Economic Integration,

Journal of EconomicIntegration,

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Review of Keynesian Economics,

Journal ofEconomic perspectives,

Canadian Journal of Economics and Political Science

International Monetary Fund Staff Papers Special,

International Monetary Fund Staff Papers

Journal of Banking & Finance,

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Effectiveness of Fiscal and Monetary Policies on Output and the Exchange Rate in China 11

InternationalReview of Economics & Finance,

The Manchester School,

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