Disinflation and exchange-rate pass-through

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2008-04-01

Author

Senay, Ozge

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This paper analyzes exchange-rate dynamics following a money-based disinflation under different degrees of exchange-rate pass-through. Using a microfounded dynamic general equilibrium model with imperfect competition and nominal rigidities, it is shown that a monetary slowdown causes an appreciation of the exchange rate and a short-run fall in employment. Varying the degree of pass-through, however, significantly alters the magnitudes of these effects. As the degree of pass-through is reduced, the extent of the short-run appreciation of the exchange rate increases and the short-run impact of the disinflation on employment falls.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/64316

Journal

MACROECONOMIC DYNAMICS

DOI

https://doi.org/10.1017/s1365100507070022

Collections

Department of Economics, Article

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Citation Formats

O. Senay, “Disinflation and exchange-rate pass-through,” MACROECONOMIC DYNAMICS, pp. 234–256, 2008, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/64316.