Exchange rate policy and export performance in a landlocked developing country: The case of Nepal

Ramesh Paudel () and Paul Burke ()

Journal of Asian Economics, 2015, vol. 38, issue C, 55-63

Abstract: This paper examines the implications of Nepal's exchange rate policy for its export performance over the period 1980–2010. We first document Nepal's long-standing currency peg against the Indian rupee and that Nepal's real exchange rate appreciated substantially from the late 1990s. We then employ a gravity modeling approach to confirm that this real exchange rate appreciation has adversely affected Nepal's exports, especially to third-country markets. Nepal's exchange rate-related export competitiveness trap provides a motivation to reconsider the current peg.

Keywords: Export performance; Real exchange rate; Gravity model; Nepal; Landlocked (search for similar items in EconPapers)
JEL-codes: F13 F14 O50 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (12)

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Working Paper: Exchange rate policy and export performance in a landlocked developing country: The case of Nepal (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:38:y:2015:i:c:p:55-63

DOI: 10.1016/j.asieco.2015.04.003

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