## The Distributional Consequences of Real Exchange Rate Adjustment

_IMF Working Papers, June 1, 2003_

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

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### 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.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-distributional-consequences-of-real-exchange-rate-adjustment-16619_