Matsen, Egil; Torvik, Ragnar; Sveen, Tommy - Institutt for Samfunnsøkonomi, Norges … - 2004
This paper analyzes the effects of fiscal policy in an open economy. We extend the savers-spenders theory of Mankiw (2000) to a small open economy with endogenous labor supply. We first show how the Dornbusch (1983) consumption-based real interest rate for open economies is modified when labor...