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

Ramesh Paudel () and Paul Burke ()

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

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)
Pages: 30 pages
Date: 2015
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (12)

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Journal Article: 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:pas:papers:2015-05

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