Large Devaluations and the Real Exchange Rate

Ariel Tomas Burstein, Martin Eichenbaum () and Sergio Rebelo ()

No 513, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

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 nontradable 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.

Keywords: Claims problems; Replication; Random arrival rule; Proportional rule; Minimal overlap rule; Constrained equal losses rule. (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin
Date: 2004-11
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Related works:
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)
Journal Article: Large Devaluations and the Real Exchange Rate (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:roc:rocher:513

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