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• Κουρέτας, Γεώργιος Π.

This paper analyses the price and output effects of monetary and fiscal policy in a small open economy with perfect capital mobility, flexible exchange rates and alternative wage - setting regimes. In the canonical models of Mundell - Fleming monetary policy is effective while fiscal policy is completely ineffective to raise domestic output. When real wage resistance prevails, though, the order is reversed. It is shown that the effects of monetary and fiscal policy depends not only on the wage regime that prevails, but also on the assumptions we make about the form of the demand for money function.

• Economics and Business
• Computer and information sciences

• Macroeconomics
• Economic policy
• Statistics

Περιέχει σχήματα, πίνακες, παράρτημα και βιβλιογραφία, This paper draws on a chapter of my Ph. D thesis at the University of Birmingham. I must thank J.L. Ford, Somnath Sen, Mansoob Murshed, David A Peel and Jay H. Levin for numerous valuable comments. Financial support by the Bakala Brothers Public Benefit Foundation and the European Free Trade Association is gratefully acknowledged.