Professor Faiçal Hossaini will conduct the upcoming AIRESS Research Seminar on Fiscal Shocks and Real Exchange Rate in a Multi-Sector Small Open Economy on Wednesday, December 10th at 12:30 p.m. Professor Hossaini will examine how different fiscal policy instruments influence macroeconomic outcome.

ABSTRACT 

This work presents a small open-economy model with tradable and non-tradable goods and includes a detailed fiscal block. The model uses an Armington structure across sectors and incorporates government consumption, public investment, and several types of taxes. This setup allows fiscal policy to influence how resources move between sectors and how the relative price of tradables changes. The analysis examines how different fiscal tools, government spending, public investment, consumption taxes, labour taxes, and capital income taxes, affect macroeconomic outcomes and the real exchange rate. By separating demand-driven and supply-driven fiscal shocks, the work highlights how policy can generate real appreciation or depreciation in economies where non-tradables play a central role. Although not all quantitative results are presented, the framework offers a clear basis for studying fiscal policy in small open economies such as Morocco.