Revisiting the exchange rate debate: the Jamaican experience

Fiona Atkins
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Fiona Atkins: Economics Department, Birkbeck College, University of London, London, UK, Postal: Economics Department, Birkbeck College, University of London, London, UK

Journal of International Development, 2000, vol. 12, issue 1, 121-131

Abstract: This paper examines the impact of exchange rate devaluation in an open island economy. By taking account of the non-stationarity of the variables, and identifying the consequent cointegrating relation, the long-run and short-run impacts are identified. The results suggest a significant and negative long-run elasticity of output in response to a devaluation of the real exchange rate. The short-run dynamics indicate that the real exchange rate makes fairly rapid adjustment when there is deviation from the long-run equilibrium relation. Such rapid response to any demand side shocks suggest that the Jamaican economy may be susceptible to Dutch Disease effects. Copyright © 2000 John Wiley & Sons, Ltd.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:12:y:2000:i:1:p:121-131

DOI: 10.1002/(SICI)1099-1328(200001)12:1<121::AID-JID624>3.0.CO;2-T

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