The Asymmetric Effects of Exchange Rate Fluctuations: Theory and Evidence From Developing Countries
IMF Working Papers, November 1, 2000
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Bibliographic details
- Authors: Magda E. Kandil
- Published: November 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451859355.001
Overview
- Title: The Asymmetric Effects of Exchange Rate Fluctuations: Theory and Evidence From Developing Countries
- Author: Magda E. Kandil
- Date: November 1, 2000
- Summary of main question: Examines asymmetric effects of exchange rate fluctuations on real output and price in developing countries.
Theoretical framework
- Decomposition: Movements in the exchange rate are decomposed into anticipated and unanticipated components.
- Channels described:
- Aggregate demand channel through exports, imports, and the demand for domestic currency (driven by unanticipated currency fluctuations).
- Aggregate supply channel through the cost of imported intermediate goods (driven by unanticipated currency fluctuations).
Empirical findings (as stated)
- Supply-channel result:
- The supply channel leads to output contraction and price inflation in the face of unanticipated currency depreciation.
- Demand-channel result for appreciations:
- The reduction in net exports determines output contraction without reducing price inflation in the face of unanticipated currency appreciation.
Subjects and keywords (as listed)
- Subject: Currencies, Depreciation, Exchange rates, Foreign exchange, Inflation, Money, National accounts, Prices, Production, Production growth
- Keywords: asymmetric fluctuations, Currencies, currency depreciation, currency price, decreases price inflation, demand and supply, demand and supply channel, Depreciation, Exchange rate, Exchange rates, foreign currency, government spending, Inflation, inflation in the face, output contraction, output price, price deflation, price inflation, price response, Production growth, rational expectations, real output growth, rises in the face, WP