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Research Details
Large Devaluations and the Real Exchange Rate, Journal of Political Economy
Abstract
In this paper we argue that the primary force behind the large drop in real exchange rates that occurs after large devaluations is the slow adjustment in the price of nontradable goods and services. Our empirical analysis uses data from five large devaluation episodes: Argentina (2001), Brazil (1999), Korea (1997), Mexico (1994), and Thailand (1997). We conduct a detailed analysis of the Argentina case using disaggregated CPI data, data from our own survey of prices in Buenos Aires, and scanner data from supermarkets. We assess the robustness of our findings by studying large real-exchange-rate appreciations, medium devaluations, and small exchange-rate movements.
Type
Article
Author(s)
Ariel Burstein, Martin S. Eichenbaum, Sergio Rebelo
Date Published
2005
Citations
Burstein, Ariel, Martin S. Eichenbaum, and Sergio Rebelo. 2005. Large Devaluations and the Real Exchange Rate. Journal of Political Economy. 113(3): 742-784.
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