Large devaluations are generally associated with large declines in real exchange rates. Burstein, Eichenbaum, and Rebelo (2005) argue that the primary force causing these declines is often the slow adjustment in the price of nontradable goods and services. We develop a model which embodies two complementary forces that account for the large declines in the real exchange rate that occur in the a...

On February 2, 2002, Lithuania switched its currency anchor from the dollar to the euro. While pegging to the dollar (since April 1994) has proven successful throughout the transition years, the recent decision to peg to the euro was motivated by the increasing trade relations with European economies. This paper does not argue which peg is more appropriate, but it analyses the implications of c...

Previous literature on the exchange rate and household consumption failed to examine effect of positive negative changes in expenditures. We extended available by investigating asymmetric impacts African emerging economies (AEE). To attain this aim, we utilized nonlinear ARDL model, which covers both shocks rate. Our results indicate that movements have all included economies, excluding Nigeria...

In this paper I estimate the labor demand response of Hungarian exporting firms to real exchange rate movements. The use of firm level export/import data enables me to separate two channels through which the exchange rate affects labor demand. First, a real depreciation raises the forint-equivalent price of foreign competitors, thereby boosting demand for the firm’s export and, hence, the firm’...