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The Impact Of Exchange Rate Pass-Through On Serbian Export Competitiveness

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  • Marković Ivan

    (University of Niš, Faculty of Economics, Serbia)

  • Marković Milan

    (PhD student; scholarship from the Ministry of Education, Science and Technological Development of the Republic of Serbia)

Abstract

The permanent existence of inflation in Serbia adversely affects achievement of macroeconomic stability. Its effects are reflected in a decrease in the real exchange rate, low price competitiveness of exports and deterioration in the balance of payments. The real exchange rate is an instrument which shows that in conditions of faster growth rate in a country than abroad, the domestic economy can't be competitive in the international market. Implementation of appropriate exchange rate regime inevitably leads to problems of exchange rate changes on import prices and inflation. The research aims to demonstrate the interdependence of inflation and depreciation, and the fact that the general price level increase is a main factor that hinders the realization of the positive effects of the national currency depreciation. Unstable monetary situation in the country undermines the goal of stimulating exports through an increase in the nominal exchange rate and by reducing export prices in foreign currency. Export becomes uncompetitive, while the depreciation of the national currency is quickly spread to inflation through the exchange rate pass-through.

Suggested Citation

  • Marković Ivan & Marković Milan, 2014. "The Impact Of Exchange Rate Pass-Through On Serbian Export Competitiveness," Economic Themes, Sciendo, vol. 52(2), pages 197-214, June.
    • Handle: RePEc:vrs:ecothe:v:52:y:2014:i:2:p:197-214:n:6
    DOI: 10.1515/ethemes-2014-0014
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    References listed on IDEAS

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    1. Jeffrey A. Frankel, 1999. "No Single Currency Regime is Right for All Countries or At All Times," NBER Working Papers 7338, National Bureau of Economic Research, Inc.
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