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Monetary policy, fisal federalism, and capital intensity

Abstract:

Can monetary policy shocks induce redistribution across natural resource rich and poor economies within a union? Resource-rich economies are more capital intensive. A two-region monetary union DSGE model with an equalizing fiscal rule and heterogeneity in capital intensity shows that positive monetary policy shocks induce redistribution from the capital-scarce region to its capital-rich counterpart because investment contracts more strongly in the latter. These patterns persist over the mediu...

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Publication status:
Published

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Publisher:
University of Oxford
Series:
OxCarre Papers
Publication date:
2016-11-23
Paper number:
181
Keywords:
Pubs id:
1143576
Local pid:
pubs:1143576
Deposit date:
2020-12-14

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