Devaluations, output and the balance sheet effect
a structural econometric analysis
Edición de la obra Devaluations, output and the balance sheet effect
| Autor | Camilo Ernesto Tovar Mora |
|---|---|
| Editorial | Bank for International Settlements |
| Fecha de publicación | 2006 |
| Lugar | Basel, Switzerland |
| Idioma | inglés |
| Formato | [electronic resource] : |
| LCCN | 2006619981 |
| Serie | BIS working papers -- no. 215 |
| Número de Cutter | M827d |
This paper estimates a new open economy macroeconomic model for South Korea to determine the output effect of currency devaluations. Three transmission mechanisms are considered: the expenditure-switching, the balance sheet, and a monetary channel associated to a nominal exchange rate target. Devaluations are defined as an increase in this target. This allows to isolate the effects of an explicit exogenous devaluationary policy shock. Ceteris paribus, a devaluation is found to be expansionary. Output contractions in South Korea should then be associated with a different shock such as an adverse shock on the international interest rate or on export demand.