The Sectoral Effects of Real Depreciations in Latin America


Sergi Lanau

Publication Date:

November 16, 2017

Electronic Access:

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This papers explores the effects of real exchange rate depreciations on growth across sectors, identifying export, cost, and import-penetration channels. It tests the existence and magnitude of these channels in a panel difference-in-difference methodology. Sectors that export more to begin with, grow relatively more in response to a depreciation. The same is true of sectors where import penetration in final demand is higher. There is no evidence that depreciations reduce growth by making imported inputs more expensive. A 10 percent real depreciation would increase growth of nontraditional sectors in Latin America by 0.6-2 percentage points mostly through the export channel.


Working Paper No. 2017/249



Publication Date:

November 16, 2017



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