01777cas a2200253 a 4500 AALejournalIMF011870 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475503661 1018-5941 BD-DhAAL BD-DhAAL Shen, Wenyi. The Effects of Government Spending Under Limited Capital Mobility / Wenyi Shen, Susan Yang. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (41 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 the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fiscal multiplier in the short run. The decline of the multiplier is larger when facing debt-elastic country risk premia. Also, government spending is more expansionary with more home bias in government purchases, more sectoral rigidities, and a less flexible exchange rate. Whether the twin-deficit hypothesis holds depends crucially on the extent to which government deficits are financed externally. Mode of access: Internet Yang, Susan. IMF Working Papers; Working Paper ; No. 2012/129 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/129/001.2012.issue-129-en.xml IMF e-Library