Silviase/jgov_v1.4_full_ann huggingface dataset:
15	物品管理法施行令(昭和31年政令第339号)第44条に規定する物品管理官吏の検査に関する事項	総務課長	委員会
16	都道府県の長又は吏員が国の歳入、歳出、歳入歳出外現金、支出負担行為、支出負担行為の確認契約(支出負担行為に係る契約を除く。)並びに債権及び物品の管理に関する事務を行うこととなることに関する事項	総務課長	委員会
17	予算の移用、流用、移替え及び科目設置に関する事項	総務課長	委員会
18	支出負担行為実施計画に関する事項	総務課長	委員会
19	支払の計画及び支出負担行為の計画に関する事項	総務課長	委員会
20	財政法第36条第1項に規定する予備費の使用に関する調書の作製、送付等に関する事項	総務課長	委員会
21	線越明許費の翌年度にわたる債務負担に関する事項	総務課長	委員会
22	線越しに関する事項	総務課長	委員会
23	年度開始前の資金交付に関する事項	総務課長	委員会
24	前金払及び概算払の協議に関する事項	総務課長	委員会
25	前渡資金の手持限度額及び手持保管額に関する事項	総務課長	委員会
26	歳入歳出外の国庫内移換えに関する事項	総務課長	委員会
27	徴収、支出総報告書に関する事項	総務課長	委員会
28	一般競争又は指名競争契約に係る有資格者の名簿作成に関する事項	総務課長	委員会
29	契約についての協議及び報告に関する事項(第34号及び第35号に掲げるものを除く。)	総務課長	委員会
30	監督及び検査の実施についての細目に関する事項	総務課長	委員会
31	国の債権の管理に関する事項(第40号に掲げるものを除く。)	総務課長	委員会
32	物品の分類に関する事項	総務課長	委員会
33	物品の分類換及び管理換に関する事項	総務課長	委員会
34	物品の不用決定の承認に関する事項	総務課長	委員会
35	物品の亡失又は損傷等の通知に関する事項	総務課長	委員会
36	物品管理法を準用する動産の指定に関する事項	総務課長	委員会
37	物品増減及び現在額報告書に関する事項	総務課長	委員会
38	物品使用職員の弁償責任の裁定に関する事項	総務課長	委員会
39	物品使用職員に対する弁償命令に関する事項	総務課長	委員会
40	物品の無償貸付及び譲与に関する事項	総務課長	委員会
41	国有財産に関する各種報告書に関する事項	総務課長	委員会
42	国有財産の管理及び処分に関する事項(第42号に掲げるものを除く。)	総務課長	委員会
43	営縄に関する事項	総務課長	委員会
44	特別調達資金に関する事項	総務課長	委員会
45	電話に関する事項	総務課長	委員会
46	安全管理に関する事項	総務課長	委員会
47	前各号に準ずる事項	総務課長	委員会
可能な森林経営を著しく阻害する要因の一つである。違法伐採が問題となっている木材生産国では、国内における法執行体制が弱いこと、低コストで生産された違法伐採木材を持ち出すことにより大きな利潤が見込まれることなどから、違法伐採が起きやすい状況にある。

我が国は、「違法に伐採された木材は使用しない」という基本的な考え方に基づき、関係各国との協力、政府調達における取組等を進めている $ ^{*102} $ 。

違法伐採対策に関する二国間協力としては、我が国は、2003年に我が国とインドネシアとの間で策定した違法伐採対策のための協力に関する「共同発表」と「アクションプラン」に基づき、2次元バーコードを活用した木材トレーサビリティ技術の開発支援を行い、同技術は2013年1月から運用が開始された。

また、2011年に中国との間で締結した「違法伐採及び関連する貿易への対処と持続可能な森林経営の支持についての協力に関する覚書」に基づき、両政府が共同して、自国で伐採、加工、流通及び輸出入される木材及び木材製品の合法性証明の仕組みの構築による合法木材・木材製品の貿易と利用の促進、木材生産国の違法伐採対策に対する支援、国内関係法令及び制度や国際的な取組等についての情報交流と能力向上等の取組を進めている $ ^{*103} $ 。2014年8月には、中国において我が国の合法木材制度を普及するセミナーを開催した。

多国間協力としては、ITTOに対して、熱帯木材生産国における伐採業者等への技術普及、政府の林業担当職員の能力向上、住民の森林経営への参加のための技術支援等に必要な資金の拠出を行っている。

このほか、2012年からAPECの「違法伐採及び関連する貿易専門家グループ(EGILAT $ ^{*} $ 104)」において、21の参加国・地域と共に、違法伐採対策に取り組むための検討を行っている。

## (森林認証の取組)

森林認証制度は、第三者機関が、森林経営の持続性や環境保全への配慮等に関する一定の基準に基づいて森林を認証するとともに、認証された森林から産出される木材及び木材製品(認証材)を分別し、表示管理することにより、消費者の選択的な購入を促す仕組みである。

国際的な森林認証制度としては、「世界自然保護基金(WWF $ ^{*105} $ )」を中心に発足した「森林管理協議会(FSC $ ^{*106} $ )」と、ヨーロッパ11か国の認証組織により発足した「PEFC $ ^{*107} $ 」の2つがあり、平成26(2014)年11月現在、それぞれ1億8,310万ha $ ^{*108} $ 、2億6,485万ha $ ^{*109} $ の森林を認証している。このうちPEFCは、世界36か国の森林認証制度との相互承認の取組を進めており、認証面積は世界最大となっている。2009年にはマレーシア、2014年には中国やインドネシアが相互承認されるなど、アジア諸国でも広がりつつある。

我が国独自の森林認証制度としては、「一般社団法人緑の循環認証会議(SGEC $ ^{*} $ 110(エスジェック))」が行っている認証があるが、国際制度としての発展を目指すため、平成26(2014)年8月にPEFCに加盟し、PEFCとの相互承認に向けた手続を進めているところである。

我が国における森林認証は、主にFSCとSGECによって行われている。平成26(2014)年11月現在の国内における認証面積は、FSCが約42万ha、SGECは約125万haとなっている(資料Ⅱ－34)。森林面積に占める認証森林の割合は数％にとどまっており、欧州や北米の国々に比べて低位にある(資料Ⅱ－35)。これは、森林所有者にとって、認証を
化二窒素の世界平均濃度は、2013年に過去最高となった $ ^{*116} $ 。

日本の年平均気温は、長期的には100年当たり約1.14℃の割合で上昇しており、特に1990年代以降、気温の高い年が頻出している(資料Ⅱ－36)。(国際的枠組みの下での地球温暖化対策)

地球温暖化は、人類の生存基盤に関わる最も重要な環境問題の一つであり、その原因と影響は地球規模に及ぶため、1980年代後半以降、様々な国際的対策が行われてきた。

1992年には、地球温暖化防止のための国際的な枠組みとして「気候変動に関する国際連合枠組条約（気候変動枠組条約） $ ^{*117} $ 」が採択された。同条約では、気候システムに危険な影響をもたらさない水準で、大気中の温室効果ガス濃度を安定化することを目的として、国際的な取組を進めることとされた。

平成9（1997）年には、京都市で、「気候変動枠組条約第3回締約国会議（COP3）」が開催され、先進国の温室効果ガスの排出削減目標等を定める「京都議定書」が採択された。「京都議定書」では、平成20（2008）年から平成24（2012）年までの5年間の「第1約束期間」の温室効果ガスの排出量を、基準年（原則として平成2（1990）年）と比較して、おいて、森林吸収量については、年平均55万haの間伐等の実施に官民一体となって取り組んだ結果、目標である3.8%分を確保した。また、国全体の目標については、森林吸収量の目標が達成されたことなどから、京都議定書第1約束期間の5か年平均で基準年比8.4%減となり、京都議定書の目標である基準年比6%減を達成することとなった（資料Ⅱ－37）。

## (2013年以降の取組)

「京都議定書」では、2013年から2020年までの8年間を「第2約束期間」としており、2011年に開催された「気候変動枠組条約第17回締約国会議(COP17*119)」では、同期間における各国の森林吸収量の算入上限値を1990年総排出量の3.5％とすること、森林から搬出された後の木材（伐採木材製品(HWP*120)）における炭素固定量を評価し、炭素蓄積の変化量を各国の温室効果ガス吸収量又は排出量として計上することなどが合意されている*121。

我が国は、第2約束期間においては京都議定書の取組に参加しておらず、第1約束期間のような法的拘束力のある削減義務は負わないものの、COP17で合意された第2約束期間の森林等吸収源のルールに則して、2013年以降の吸収量の報告を行うこと

先進国全体で少なくとも5％削減を目指すこと、我が国については法的拘束力のある約束として6％削減することが定められた。また、森林吸収量 $ ^{*118} $ については、我が国の年当たりの算入上限が、基準年の総排出量（12億6,100万CO $ _{2} $ トン）の3.8％に相当する1,300万炭素トン（約4,770万CO $ _{2} $ トン）とされた。

京都議定書第1約束期間に

資料Ⅱ－36 我が国における年平均気温(平年差)の推移

注：気温平年差は、各年の平均気温の基準値（1981～2010年の30年平均値）からの差。資料：気象庁ホームページ「日本の年平均気温」（平成27（2015）年1月5日更新）より林野庁作成。
IV. Is the Transmission of Foreign Fiscal Policy Disturbance

Magnified or Lessened by Floating Exchange Rates?

## (A) General observations

The multipliers of the EPA model indicate that under

the fixed regime, the effects of an expansionary fiscal

policy on real GNP are apt to peter out as time goes by,

i.e., a crowding-out of private expenditures via higher real

interest rates or higher inflation rates. Under floating

exchange rates, however, the own effects of a fiscal shock on

real GNP are universally greater, and last longer than under

fixed exchange rates.

Do the intensified own effects, i.e., the bottling-up

effects, suggest the possibility of insulation effects of

floating exchange rates? Putting it in another way, does the

floating exchange regime transmit foreign fiscal policy

disturbances to a domestic economy with greater or weaker

force than the fixed regime?

At the outset, let us summarize the main fact findings

of the impact of a fiscal shock given by each country. Table

8-A shows the own and cross effects of a sustained increase

in real government expenditure of 1 percent of GNP. As

explained earlier, each country initiating the fiscal

disturbance is shown in the row heading and each country to

which such disturbances are transmitted from abroad is shown

in the column heading.
First, the transmission effect of a US fiscal

disturbance to other foreign economies is in general greater

under floating than under fixed exchange rates. Real GNP in

all other countries is affected more strongly for all years

after the initial fiscal shock given by the U.S. Exceptions

are AL and FR from the second year on, and CA for a few

years. In particular, differences in the impact on real GNP

between different exchange rate regimes are remarkably larger

for GE (from the second year on), UK (from the third year on)

and IT (from the third year on).

Second, the transmission effects of a fiscal

disturbance originating in GE on other countries are quite mixed.

Under floating exchange rates the transmission effects

on real GNP are stronger in the case of IT, CA, AL and KR for

almost all years after the initial fiscal shock given by GE.

In contrast, the GE fiscal impact is transmitted less to JA

(after the second year), UK (for the first two years) and FR

(for all years) under floating exchange rates.

Likewise, the difference in the transmission effects of

UK fiscal policy on other countries between fixed and

floating exchange rates is also mixed and very similar to

that of GE fiscal policy.
Third, the effects of a fiscal shock in JA are

transmitted to other countries with a weaker or the same

force under the floating regime when compared to the fixed

exchange rate.

A most interesting question is what accounts for the

different directions of the transmission of foreign fiscal

disturbances to other countries with respect to their impact

on real GNP. Why do floating exchange rates sometimes

magnify the transmission effects of foreign fiscal shocks in

some countries and at other times mitigate such effects in

other countries? A key channel of strengthening or weakening

the transmission effects of a fiscal shock is through

exchange rate movements.

## (B) US fiscal policy

When US fiscal policy becomes expansionary, all other

currencies depreciate vis a vis the US dollar, except FR and

AL after the second year, and CA in the last two years.

These exceptions are consistent with the opposite impact on

real GNP of these countries, as mentioned above. Reflecting

the depreciations of most currencies in most years, the

effective exchange rate of the US dollar continues to remain

appreciated after an expansionary fiscal shock given in the

U.S. (Table 8-B)
The mechanism for the depreciations of non-US

currencies is rather clear. Interest rates of US are most

sensitive to a fiscal expansion among countries (See Part I

of this paper). A sustained increase in real government

non-wage expenditure by 1 percent of real GNP raises short-

term interest rates in the U.S. by above 1 percentage point

for the first year and about 1.4 - 1.7 percentage points for

the second and third years (Table 8-C). In the case of other

countries, the magnitude of rises in shot-term interest

rates ranges from 0.2 to 0.5 percentage points for the second

and third years, given the same fiscal shock equivalent to 1

percent of GNP in each country (as suggested by the case of

fixed exchange rates). In general, the fiscal shock-induced

high interest rates in the U.S. invite net capital inflows

from other countries and generate deficits in their capital

accounts which surpass surpluses in the current account

caused by the same U.S. fiscal stimuli. As a result, all

non-US currencies depreciate, and net exports in real terms

expand for all other countries. Exports of goods to the U.S.

from JA increase by 5.5 - 6.5 percent, from GE by 5.3 - 5.4

percent and from UK by 4.3 - 4.7 percent for the second and

third years.

While U.S. fiscal disturbances are transmitted with

greater force to many countries, the own effect on U.S. real

GNP remains more or less unchanged regardless of the exchange

rates regime. In other words, appreciation of the U.S.

dollar does not lessen the effects of an expansionary fiscal

policy on her own real GNP. This is because while the
(% deviations from the standard solution)

From Year	To	US	UK	FR	GE	IT	CA	JA	AL	KR
Fix	Flex	Fix	Flex	Fix	Flex	Fix	Flex	Fix	Flex	Fix	Flex	Fix	Flex	Fix	Fix	Fix
US	1	-0.59	0.32	0.02	0.89	0.11	1.43	0.66	0.09
2	-0.71	0.11	-1.33	2.25	0.06	1.43	0.95	-1.15
3	-0.29	0.33	-3.92	2.67	0.17	0.46	0.78	-2.09
6	-1.11	6.20	-4.70	3.13	0.86	-1.03	1.12	-4.19
UK	1	-0.03	1.40	-0.34	-0.30	-0.05	0.04	-0.17	0.02
2	0.39	3.11	-2.17	-1.46	-0.21	0.09	-0.40	-0.03
3	0.59	3.35	-3.07	-1.67	-0.18	0.04	-0.59	-0.13
6	0.33	7.26	-3.05	-2.70	0.09	-0.03	-0.84	-0.17
FR	1	-0.03	0.01	0.39	-0.11	-0.02	0.01	-0.03	0.00
2	-0.30	-0.02	2.46	-0.39	0.05	0.01	-0.07	-0.00
3	-0.62	-0.01	4.01	-0.23	0.18	-0.01	0.01	-0.01
6	-0.52	-0.00	3.37	-0.39	0.08	0.01	0.29	-0.00
GE	1	-0.10	-0.13	-0.57	0.94	-0.11	0.06	-0.23	0.01
2	-0.43	-0.49	-2.94	4.12	-0.06	0.09	-0.49	-0.04
3	-0.52	-0.56	-4.09	5.33	0.09	0.02	-0.56	-0.11
6	-1.41	0.17	-1.77	6.70	0.35	-0.04	-0.42	-0.05
IT	1	-0.05	-0.03	-0.23	-0.21	1.40	0.02	-0.04	0.00
2	0.22	-0.16	-1.03	-0.67	1.56	0.03	-0.10	-0.01
3	0.42	-0.26	-1.59	-0.90	1.55	0.02	-0.25	-0.04
6	0.12	-0.02	-0.71	-0.69	2.39	-0.03	-0.41	-0.04
CA	1	0.01	0.05	-0.01	-0.00	-0.00	-0.11	-0.02	0.02
2	0.12	-0.01	-0.24	-0.04	-0.05	-0.37	-0.03	-0.05
3	0.22	-0.07	-0.78	-0.05	-0.07	-0.18	-0.16	-0.17
6	-0.02	0.44	-0.48	-0.08	0.08	0.66	-0.20	-0.25
JA	1	-0.29	0.12	0.04	-0.03	0.08	0.01	1.46	0.00
2	-0.62	0.26	0.03	-0.03	0.22	-0.00	3.21	0.00
3	-0.58	0.30	-0.06	0.06	0.21	0.00	2.97	-0.02
6	-0.17	0.32	-0.57	-0.05	0.02	-0.00	1.29	-0.05
AL	1	0.02	-0.00	-0.01	-0.01	-0.00	0.01	-0.05	0.02	-
2	0.09	-0.06	-0.12	-0.09	-0.03	0.02	-0.18	0.30
3	0.15	-0.09	-0.29	-0.14	-0.04	0.01	-0.23	0.34
6	0.15	-0.02	-0.29	-0.17	0.00	-0.01	-0.28	1.69
KR	1	0.01	-0.00	-0.01	-0.00	-0.00	0.00	-0.04	0.00
2	0.03	-0.01	-0.04	-0.02	-0.01	0.01	-0.10	-0.00
3	0.05	-0.02	-0.09	-0.03	-0.02	0.00	-0.13	-0.01
6	0.06	0.01	-0.13	-0.04	-0.00	-0.01	-0.13	-0.01

(Source) The EPA World Econometric Model, February 1984.
Table 8-C Effects on Short Term Interest Rates (RS) of Sustained Increase in Real Government Expenditure by 1 percent of Real GNP

(percentage point, deviations from the standard solution)

(Source) The EPA World Econometric Model, February 1984.
appreciation of the U.S. currency reduces her net exports in

real term and exerting the deflationary impact on her own

economy, the lower inflation rates of consumption deflator

thanks to the dollar appreciation stimulate private

consumption and offset such deflationary impact.

What is interesting to note here is that the floating

exchange rate regime improves the trade off relationship

between unemployment and inflation rates in the case of U.S.

fiscal policies. This is because the impact on real output

under the floating regime remains as expansive as under the

fixed regime, while domestic inflation rates slow down owing

to the dollar appreciation.

Why is the impact on real GNP in AL deflationary when

the U.S. adopts an expansionary fiscal policy? This is

because high U.S. interest rates due to her expansionary

fiscal shock cause funds to drain from AL financial

institutions, leading to high interest rates in AL and a

resultant fall in real GNP. In fact, interest rates in real

terms rise most in AL as against other countries.

(C) Effects of Non-US fiscal policy

## (i) GE fiscal policy

As mentioned above, a fiscal shock given by GE exerts different effects on real GNP in different countries. The different impacts are ascribed largely to the magnitude of the appreciation of the currencies vis a vis DM, as indicated
in Tables 8-A and 8-B by the different size of appreciations

or depreciations of the currencies in relation to the US

dollar. The currency of IT appreciates vis a vis US dollar

only by around 0.1 percent for the first years, and AL dollar

appreciates from the second year on, whereas the larger

appreciation vis a vis US dollar of 0.5 percent takes place

both for the pound sterling and for the yen in the second and

third years. The appreciation of the French franc in relation

to US dollar is particularly great. In contrast, the CA

dollar depreciates somewhat against US dollar and the KR won

is fixed with the US dollar.

The larger the appreciation of the currencies, the

smaller the transmission effects of the GE fiscal expansion

on other economies, and vice versa. The mechanisms for

different magnitude of appreciations are as follows. Two

forces work against each other. On the one hand, economic

expansion in GE contributes to surpluses in the current

account of other countries except CA. On the other, higher

interest rates in GE caused by its expansionary fiscal shock

worsen the capital account of other countries. Since the

improved current account outweighs the worsened capital

account, the currencies of the affected countries appreciate

vis a vis the US dollar and the US dollar also appreciates

vis a vis DM, though its effective exchange rate depreciates.

The size of the appreciation of the currencies hence depends

on how much the improved current account outweighs the
improved capital account. In the case of FR, JA, IT, and UK the favorable impact on the current account is large, reflecting relatively heavy dependence on GE market.

## (ii) JA fiscal policy

The effects of an expansionary fiscal policy in JA are generally transmitted to many countries with weaker force under floating exchange rates, because most other currencies tend to appreciate in the face of depreciation of the yen vis a vis the US dollar. The pound sterling depreciates most under an expansionary fiscal disturbance originating in JA. The large depreciation of the pound sterling is attributable to the following factors. Although UK current account improves owing to an increase in the world trade triggered by the expansionary fiscal shock in JA, UK capital account deteriorates due to higher interest rates in JA and also in US. As discussed earlier, US interest rates are quite sensitive to expenditure shocks. Since deficits in the capital account outweigh surpluses in the current account, the pound sterling deteriorates.

## (iii) UK fiscal policy

As mentioned earlier, the differences in the transmission effects of UK fiscal policy on other countries' GNP under the different exchange rate regimes are very similar to those of GE fiscal policy (Table 8-A). A main difference, however, lies in movements of the effective
exchange rate of the US dollar. When GE undertakes an

expansionary fiscal policy, the effective exchange rate of

the US dollar depreciates. In contrast, an expansionary

fiscal policy in UK brings about depreciations of the US

dollar except for the first year (Table 8-B). This

difference arises from the aforementioned high income

elasticity of UK imports, which causes a strong improvement

of GE current account under the expansionary fiscal policy in

UK and hence, large appreciations of DM vis a vis the US

dollar, contributing to the depreciations of the effective

exchange rate of the US dollar. In the case of an

expansionary fiscal shock given by GE, however, the resultant

depreciations of DM are relatively large particularly for the

second and third years and appreciations of the pound

sterling are relatively weak. As a consequence, the

effective exchange rate of the US dollar appreciates under

the expansionary fiscal shock in GE. It goes without saying

that the currency weight in the determination of the tarde

weighted effective exchange rate of the dollar is heavier for

DM than for the pound sterling.

## (D) The International Transmission of Interest Rates

Can the floating exchange rate regime insulate domestic

interest rates from foreign economic disturbances? Yes, it

can, but not fully, and the insulation effects depend on the

nature of foreign economic shocks, as well as the way of

conducting monetary policies in the affected countries.
The mechanism for the transmission of foreign interest

rates are not direct but indirect in a sense that foreign

economic disturbances affect the demand for money in a

domestic economy, leading to changes in home interest rates

(at the short end), given the supply of the high-powered

money. In the EPA World Econometric Model, the individual

country models of GE and JA explicitly capture this

mechanism. Other country models adopt rather straight

approach to the determination of interest rates. For

instance, Canadian interest rates are determined by monetary

authorities in such a way that the domestic short-term

interest rate does not largely deviate from the US interest

rate. French authorities set the short-term interest rate in

order for the French franc not to fluctuate much in its value

relative to the US dollar. French authorities also take into

consideration the German short-term interest rate in

determining French short-term interest rate. The short-term

interest rate in the UK is determined mainly by the demand-

supply conditions of UK treasury bills. The case of AL was

already mentioned.

When the US fiscal policy becomes expansive, the demand

for money increases due to rises in nominal GNP or domestic

absorption in the GE and JA models, which are in turn caused

by the expansionary transmission of US fiscal shock to real

GNP in GE and JA and by depreciations of DM and Yen and

resultantly higher domestic price levels, as already

discussed.
Nevertheless, the transmission effects of the US short-term interest rate to home interest rates are lessened by floating exchange rates as compared with the case of fixed exchange rates (Table 8-C).

The transmission mechanisms work through changes in the

high-powered money stock, which exert a large impact on the

short-term interest rate, particularly in GE. Under the

fixed exchange rate regime, an expansionary fiscal shock

given by the US results in a rather sharp decline in external

reserves of GE and JA due to the deterioration in the overall

balance of payments, as noted already. This decline in

foreign reserves and in the high-powered money causes higher

interest rates in GE and JA. Under the floating regime,

however, authorities’ intervention in the foreign exchange

market becomes much less in GE and JA. For example, in the

first three years of the sustained increase in real non-wage

government expenditure in the US by 1 percent of real GNP,

the sum of official intervention in GE amounts to a decline

in external reserves of DM 5.62 billion under fixed exchange

rates, as against only a decline of DM 1.51 billion. In the

case of JA, its external reserves decline by US$279 million

in the same three years under the fixed regime, whereas they

increase by US$814 million under the floating regime. Thus,

the US fiscal shock-induced higher interest rates are

transmitted to GE and JA to a lesser extent under floating

than under fixed exchange rates (Table 8-C).
In the case of the UK, the more expansionary

transmission of the US fiscal policy impact under the

floating regime raises economic activities to higher levels,

resulting in the increased demand for UK treasury bills on

the one hand, and the reduced supply of treasury bills due to

the improved government budget imbalance on the other.

Consequently, the short-term interest rate in the UK rises to

a lesser extent under floating than under fixed exchange

rates.

In sharp contrast to these weaker transmission effects

on interest rates in GE, JA and UK under floating compared

with fixed exchange rates, the short-term interest rate in CA

is more greatly influenced by the expansionary fiscal policy

in US under floating than under fixed rates. This greater

transmission effect is attributable to much higher inflation

rates in CA due to both higher domestic demand and

depreciations of the Canadian dollar. In the EPA Canadian

model, the short-term interest rate in CA is determined by

the international differential of inflation rates between CA

and the US in addition to other variables such as the US

treasury bill rate, deviations of actual money supply from

the Canadian authorities' monetary target, etc. Since an

expansionary fiscal shock given by the US results in an

expansionary demand stimulus for the Canadian economy and a

depreciation of the Canadian dollar, the price level in CA

rises to a greater extent under the floating compared with
the fixed exchange regime. Consequently, the short-term interest rate rises to a higher level under the floating regime.

Let us summarize the international transmission of

interest rates under floating exchange rates. An

expansionary fiscal shock in US generally transmits interest

rates into other countries to a lesser extent under the

floating as compared with the fixed regime. In other words,

floating exchange rates insulate domestic interest rates in

many countries from the US fiscal shock, though insulation

effects are not necessarily full and the insulation

mechanisms vary from country to country, reflecting the

differences in the way of conducting monetary policies. CA

was an exception due to her unique monetary policy conduct.

## (E) Brief Summary of the Insulation and Transmission Effects under Expansionary Fiscal Shocks

In summing up the insulation and transmission effects

of expansionary fiscal shocks, two interesting facts stand

out with regard to the transmission of a fiscal shock under

floating exchange rates.

First, whether an expansionary fiscal policy results in a currency appreciation or depreciation of the originating country depends critically on the magnitude of reaction of interest rates to tightened money markets under the fiscal stimuli. The response of interest rates to such fiscal