000265713 001__ 265713
000265713 005__ 20190601123519.0
000265713 037__ $$aARTICLE
000265713 245__ $$a"Does Austerity Go Along With Internal Devaluations?
000265713 260__ $$c2019
000265713 269__ $$a2019
000265713 336__ $$aJournal Articles
000265713 520__ $$aCuts to government spending rather than increases in consumption taxes are statistically associated with internal devaluations in the euro area during the period 2010-2014. Countries that cut spending experienced a decline in nominal wages, rising net exports, a fall in the relative price of non-tradables and a shift of consumption towards non-tradables. We show that these patterns are generally consistent with a neoclassical small open economy model with GHH preferences. The main remaining discrepancy between model and data is a missing terms of trade response in the data: Export prices did not decline in austere countries (nor did import prices), giving rise to asymmetric expenditure switching: Current account improvements are solely driven by falls in imports rather than increasing exports.
000265713 700__ $$aProebsting, Christian
000265713 700__ $$aLambertini, Luisa
000265713 773__ $$tIMF Economic Review
000265713 8560_ $$fcristina.martinucci@epfl.ch
000265713 8564_ $$uhttps://infoscience.epfl.ch/record/265713/files/IMF_submission%20%281%29.pdf$$s3395876
000265713 909C0 $$zPanes, Mathilde$$xU11431$$pSFI-LL$$mcristina.martinucci@epfl.ch$$0252269
000265713 909CO $$ooai:infoscience.epfl.ch:265713$$particle$$pCDM
000265713 960__ $$acristina.martinucci@epfl.ch
000265713 961__ $$apierre.devaud@epfl.ch
000265713 973__ $$aEPFL$$sSUBMITTED$$rREVIEWED
000265713 980__ $$aARTICLE
000265713 981__ $$aoverwrite