01915cas a2200241 a 4500 AALejournalIMF003023 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852646 1018-5941 BD-DhAAL BD-DhAAL Ganelli, Giovanni. Public Spending Management and Macroeconomic Interdependence / Giovanni Ganelli. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies, in the context of a New Open Economy Macroeconomics (NOEM) model, the effects of "public competition policies" aimed at improving the efficiency of public spending. Such measures are modeled as an increase in the price elasticity of public consumption. The paper finds that public competition policies significantly affect macroeconomic interdependence across countries. Following a domestic fiscal expansion, an higher public price elasticity increases the substitutability between goods purchased by the domestic and the foreign governments. The same exchange rate variation can therefore sustain larger shifts in relative demand for goods. The expenditure-switching effect is magnified, implying a larger change in relative output. In welfare terms, countries with a larger government sector have an incentive to promote public competition policies. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2004/102 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/102/001.2004.issue-102-en.xml IMF e-Library