NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Large Devaluations and the Real Exchange Rate

Ariel Burstein, Martin Eichenbaum, Sergio Rebelo

NBER Working Paper No. 10986
Issued in December 2004
NBER Program(s):   EFG   IFM

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.

download in pdf format
   (419 K)

email paper

This paper is available as PDF (419 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10986

Published: Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2005. "Large Devaluations and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 742-784, August. citation courtesy of

Users who downloaded this paper also downloaded these:
Burstein, Eichenbaum, and Rebelo w11638 Modeling Exchange-Rate Passthrough After Large Devaluations
Rebelo w11401 Real Business Cycle Models: Past, Present, and Future
de Paula and Scheinkman w13486 The Informal Sector
Nelson and Schwartz w13546 The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's "Who Was Milton Friedman?"
Burstein, Eichenbaum, and Rebelo w8748 Why Are Rates of Inflation So Low After Large Devaluations?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us