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 11
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