This paper aims to explain why fiscal multipliers are generally low, even close to zero, in emerging economies (EMEs). Our explanation jointly relies on the behavior of the exchange rate following a fiscal shock and on the proportion of external debt denominated in foreign currency, which is...

In this paper, we demonstrate that the size of the fiscal multiplier depends both oncurrency mismatch and home bias. Our demonstration is based on a real two-countrydynamic stochastic general equilibrium model with incomplete and imperfect internationalfinancial markets, external debt and...