NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Fiscal Policies and the Dollar/Pound Exchange Rate: 1870-1984

Vittorio U. Grilli

NBER Working Paper No. 2482
Issued in 1988
NBER Program(s):   ITI   IFM

This paper investigates the consequences of fiscal policies for the exchange rate. After developing a simple theory of how government financing policies should effect the exchange rate, we test it using data on the dollar/pound exchange rate. Previous analyses have concentrated mainly on the past-Bretton Woods flexible exchange rate system, thus ignoring potentially useful information contained In fixed exchange rate periods or in previous flexible exchange rate periods. This paper shows that it is theoretically proper and econometrically feasible to merge evidence from different nominal exchange rate systems. The gain of this procedure is that we can extend the sample period back to the 1870's. Our results suggest that permanent government expenditures are the only fiscal variables that significantly affected the dollar/pound nominal exchange rate. Budget deficits appear to be irrelevant in this respect.

download in pdf format
   (239 K)

download in djvu format
   (157 K)

email paper

This paper is available as PDF (239 K) or DjVu (157 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2482

Published: Grilli, Vittorio and Graciela Kaminsky. "Nominal Exchange Rate Regimes And The Real Exchange Rate: Evidence From The United States And Great Britain, 1885-1986," Journal of Monetary Economics, 1991, v27(2), 191-212.

Users who downloaded this paper also downloaded these:
Grilli and Roubini w3088 Financial Integration, Liquidity and Exchange Rates
Kahl, Liu, and Longstaff w8969 Paper millionaires: How valuable is stock to a stockholder who is restricted from selling it?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us