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We study the empirical effects of fiscal policy in Denmark since the adoption of a fixed exchange rate policy in 1982. Denmark’s fixed exchange rate implies that the nominal interest rate remains fixed after a fiscal expansion, facilitating a substantial impact of the fiscal stimulus on the...
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The paper studies international coordination of fiscal stabilization policies in a two-country stochastic general equilibrium model. The countries are assumed to differ in the sense that wages in one country are flexible whereas wages in the other country are rigid in real terms. It is found...
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