Exchange rate regimes and fiscal discipline: the role of trade openness Chowdhury, Mohammad T. H., Bhattacharya, Prasad S., Mallick, Debdulal and Ulubasoglu, Mehmet A. 2016, Exchange rate regimes and fiscal discipline: the role of trade openness, International review of economics and finance, vol. 45, pp. 106-128, doi: 10.1016/j.iref.2016.04.013. Attached Files Name Description MIMEType Size Downloads Title Exchange rate regimes and fiscal discipline: the role of trade openness Author(s) Chowdhury, Mohammad T. H. Bhattacharya, Prasad S. orcid.org/0000-0003-2818-0835 Mallick, Debdulal orcid.org/0000-0002-3919-4784 Ulubasoglu, Mehmet A. orcid.org/0000-0003-3055-5755 Journal name International review of economics and finance Volume number 45 Start page 106 End page 128 Total pages 23 Publisher Elsevier Place of publication Amsterdam, The Netherlands Publication date 2016-09 ISSN 1059-0560 Keyword(s) Exchange rate regimes Fiscal discipline Trade openness Budget balance Summary This study revisits the relationship between exchange rate regime (ERR) choice and fiscal discipline focusing on the role of trade openness. The conventional theoretical view is that fixed regimes bring about more fiscal discipline, while the recent literature argues that flexible regimes are more disciplinary. Empirical studies have provided mixed evidence. Using a panel dataset for a large number of developing and developed countries, as well as pooled panel OLS and instrumental variables (IV) estimation techniques, we find support for both views. We document that a fixed ERR is disciplinary at low levels of trade openness, while a flexible regime produces a greater fiscal discipline above a certain level of trade openness. Moreover, this relationship applies to only developing countries. These findings remain robust across different measures of fiscal outcomes, a number of controls, across different sub-samples, and are supported by both annual and five-year averaged panel data. Language eng DOI 10.1016/j.iref.2016.04.013 Field of Research 140210 International Economics and International Finance 1402 Applied Economics 1502 Banking, Finance And Investment Socio Economic Objective 910104 Exchange Rates HERDC Research category C1 Refereed article in a scholarly journal ERA Research output type C Journal article Copyright notice ©2016, Elsevier Persistent URL http://hdl.handle.net/10536/DRO/DU:30084139 Document type: Journal Article Collections: Faculty of Arts and Education Faculty of Business and Law Alfred Deakin Institute for Citizenship and Globalisation Department of Economics Related Links Link Description Connect to published version Go to link with your DU access privileges     Unless expressly stated otherwise, the copyright for items in DRO is owned by the author, with all rights reserved. Versions Version Filter Type Fri, 10 Jun 2016, 12:00:21 EST Sat, 11 Jun 2016, 05:00:16 EST Tue, 14 Jun 2016, 13:44:17 EST Tue, 16 Aug 2016, 09:59:07 EST Tue, 16 Aug 2016, 10:06:54 EST Tue, 16 Aug 2016, 10:08:28 EST Wed, 09 Nov 2016, 11:17:18 EST Filtered Full Citation counts:   Cited 4 times in TR Web of Science Cited 3 times in Scopus Search Google Scholar Access Statistics: 491 Abstract Views, 2 File Downloads  -  Detailed Statistics Created: Fri, 10 Jun 2016, 12:00:21 EST

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