The Role of Distribution of the Income Shares of Individuals in Tradables and Nontradables on Exchange Rate Fluctuations and Delay of Stabilizations

Ahmet Aysan

MPRA Paper from University Library of Munich, Germany

Abstract: This paper shows that exchange rate alignments are also used for the redistribution of income among different groups. The heterogeneous impacts of stabilization policies lead to formation of various coalitions throughout the evolution of stabilization programs. These coalitions can produce unsustainable economic policies at the expense of other groups. The model categorizes these various groups with respect to their shares in total production of tradables and nontradables. An increase in the relative prices of nontradables benefits the poor more than the rich and middle classes. In addition to the poor, the rich benefit from unsustainable macroeconomic polices by lending to the government and eventually escaping the cost of stabilization in the long run.

Keywords: Stabilization policies; Overvaluation; Redistribution; Exchange Rate Fluctuations (search for similar items in EconPapers)
JEL-codes: E32 F30 F41 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/5485/1/MPRA_paper_5485.pdf original version (application/pdf)

Related works:
Working Paper: The Role of Distribution of the Income Shares of Individuals in Tradables and Nontradables on Exchange Rate Fluctuations and Delay of Stabilizations (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5485

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().