[Lecture] Financial Markets and the Effects of Fiscal Policy in Open Economy
Speaker: Qian Zongxin (Renmin University of China)
Venue: PKU National School of Development/ Research Center for Chinese Economic small lecture hall
Date: Wednesday, March 28, 2018
Qian Zongxin is an associate professor from School of Money and Finance, Renmin University of China. He received his Ph.D. in economics at Tilburg University, the Netherlands. His main research areas include interactions between macroeconomic policies and the financial sector, sovereign credit risk and fiscal policy credibility, financial institutions and financial markets, inflation, and other problems of macroeconomics. He has published papers on Journal of Macroeconomics, Macroeconomic Dynamics, Journal of Financial Stability, Emerging Market Finance and Trade, Economic Research Journal.
Introduction of the lecture:
We study the effects of fiscal policy in open economy. More specifically, we focus on the effect of a Robin-Hood policy which taxes the savers and subsidize the borrowers. Such a Robin-Hood policy breaks the Ricardian equivalence because the borrowers are liquidity constraint. Previous literature shows that such a mechanism can generate a positive fiscal multiplier and help stop deflation in a closed economy. In an economy which is both open in commodity trade and financial account, fiscal policy can further affect the economy through the exchange rate and financial asset pricing. In this paper, we show that the impact of the fiscal policy in an open economy depends on the financial market structure.
Written by: Wu Chaochao
Edited by: Hu Rong
Source: Peking University Lecture Hall