The Distributional Consequences of Real Exchange Rate Adjustment

IMF Working Papers, June 1, 2003

Source details

Canonical URL

The Distributional Consequences of Real Exchange Rate Adjustment

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Vladimir Klyuev
• Published: June 1, 2003
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451855517.001

Summary

• Focus: distributional consequences of macroeconomic adjustment.
• Core insight: Preferences of economic agents over the level of the real exchange rate derived from standard models are monotonic, with agents favoring either an infinitely appreciated or depreciated rate.
• Purpose: Present a model that generates less extreme preferences by introducing mechanisms that make both appreciation and large depreciation potentially harmful to economic activity.
• Uses: Results can be used to analyze political economy aspects of macroeconomic adjustment.

Model and Mechanism

• The model:
  • Is in the spirit of the dependent economy model.
  • Is built on explicit microfoundations.
• Key behavioral channels:
  • Appreciation would depress economic activity.
  • Large depreciation would hit the tradable sector by limiting the availability of labor, offsetting the favorable price effect.

Findings and Implications

• Distributional consequences:
  • Standard models predict monotonic preferences (agents prefer extreme appreciation or depreciation).
  • The presented model delivers non-monotonic, less extreme preferences by accounting for activity-depressing effects of appreciation and labor-availability constraints after large depreciation.
• Political economy relevance:
  • The model’s results can be applied to analyze political economy aspects of macroeconomic adjustment, shedding light on why different groups may favor distinct exchange rate levels.

Key statistics and publication metadata

• Author: Vladimir Klyuev
• Date: June 1, 2003
• Pages: 35
• Volume: 2003
• Issue: 133
• Series: Working Paper No. 2003/133
• DOI: https://doi.org/10.5089/9781451855517.001
• Stock No: WPIEA1332003
• ISBN: 9781451855517
• ISSN: 1018-5941
• Citation preview included: Vladimir Klyuev. "The Distributional Consequences of Real Exchange Rate Adjustment", IMF Working Papers 2003, 133 (2003), accessed 9/11/2026, https://doi.org/10.5089/9781451855517.001
• The IMF eLibrary offers over 25,000 IMF publications in multiple formats.

Source: IMF Working Paper "The Distributional Consequences of Real Exchange Rate Adjustment" by Vladimir Klyuev, June 1, 2003.

Content in this bundle

• The Distributional Consequences of Real Exchange Rate Adjustment - WP/03/133
  • The Distributional Consequences of Real Exchange Rate Adjustment - WP/03/133 (Markdown version)
  • The Distributional Consequences of Real Exchange Rate Adjustment - WP/03/133 (PDF)