On the Distributional Effects of Exchange Rate Fluctuations

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On the Distributional Effects of Exchange Rate Fluctuations

March 2002 Number 146

JEL classification: F31, F41, F42

Author: Cédric Tille

The paper studies the differential impact of exchange rate fluctuations on households in a country. I extend earlier research by relaxing the assumption of complete international sectoral specialization. My setup allows for the presence of several different sectors in a given country, each producing a different type of good. Combined with incomplete asset markets, the sectoral dimension leads to a heterogenous impact of exchange rate fluctuation within each country. In particular, although a depreciation of a country's currency has an adverse “beggar-thyself” effect for the country as a whole, a minority of households benefit.

Available only in PDF PDF

33 pages / 467 kb

For a published version of this report, see Cédric Tille, "On the Distributional Effects of Exchange Rate Fluctuations," Journal of International Money and Finance 25, no. 8 (December 2006): 1207-25.

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