Large Devaluations and the Real Exchange Rate

Martin Eichenbaum, Sergio Rebelo () and Ariel Burstein

No 4810, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this Paper we argue that the primary force behind the large drop in real exchange rates that occurs after large devaluations is the slow adjustment in the price of non-tradable goods and services. Our empirical analysis uses data from five large devaluation episodes: Argentina (2001), Brazil (1999), Korea (1997), Mexico (1994), and Thailand (1997). We conduct a detailed analysis of the Argentina case using disaggregated CPI data, data from our own survey of prices in Buenos Aires, and scanner data from supermarkets. We assess the robustness of our findings by studying large real-exchange-rate appreciations, medium devaluations, and small exchange-rate movements.

JEL-codes: F31 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-ifn and nep-lam
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Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Large Devaluations and the Real Exchange Rate (2005)
Working Paper: Large Devaluations and the Real Exchange Rate (2004)
Working Paper: Large Devaluations and the Real Exchange Rate (2004)
Working Paper: Large Devaluations and the Real Exchange Rate (2004)
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