The Sectoral Effects of Real Depreciations in Latin America

Sergi Lanau

No 2017/249, IMF Working Papers from International Monetary Fund

Abstract: This papers explores the effects of real exchange rate depreciations on growth across sectors, identifying export, cost, and import-penetration channels. It tests the existence and magnitude of these channels in a panel difference-in-difference methodology. Sectors that export more to begin with, grow relatively more in response to a depreciation. The same is true of sectors where import penetration in final demand is higher. There is no evidence that depreciations reduce growth by making imported inputs more expensive. A 10 percent real depreciation would increase growth of nontraditional sectors in Latin America by 0.6-2 percentage points mostly through the export channel.

Keywords: WP; import-penetration channel; real exchange rate; depreciation; exports; imports; growth; export channel; import-penetration result; import-penetration terms; depreciation episode; Real exchange rates; Exchange rate adjustments; Global (search for similar items in EconPapers)
Pages: 20
Date: 2017-11-16
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Citations: View citations in EconPapers (4)

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