Exchange Rate Pass-Through and Unemployment Dynamics

Chak Hung J. Cheng
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Chak Hung J. Cheng: Assistant Professor of Economics, Department of Economics and Finance, Murray State University, United States

International Journal of Business and Social Research, 2013, vol. 3, issue 8, 1-17

Abstract: This paper develops a small open economy model with nominal rigidities and search-matching frictions to study the implications of incomplete exchange rate pass-through for unemployment dynamics. The model shows that incomplete exchange rate pass-through to the prices of imported goods has a larger impact on unemployment movements than does incomplete pass-through to the prices of imported inputs. Also, the effect of delayed exchange rate pass-through on unemployment dynamics depends critically on the nature of the shock that disturbs the economy.

Keywords: exchange rate pass-through; unemployment; search and matching frictions (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:mir:mirbus:v:3:y:2013:i:8:p:1-17

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