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Exchange rate pass-through, the terms of trade and the trade balance

Author

Listed:
  • Eithne Murphy
  • Lelio Lapadre

    (Department of Economics, National University of Ireland, Galway)

Abstract

We show that if exchange rate pass-through is incomplete, a country's terms of trade may move in the same or contrary direction to the nominal value of its currency. Moreover, when the degree of pass-through is endogenous, the trade balance must improve it the currency devalues.

Suggested Citation

  • Eithne Murphy & Lelio Lapadre, 1999. "Exchange rate pass-through, the terms of trade and the trade balance," Working Papers 34, National University of Ireland Galway, Department of Economics, revised 1999.
    • Handle: RePEc:nig:wpaper:0034
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    File URL: http://www.economics.nuig.ie/resrch/paper.php?pid=39
    File Function: First version, 1999
    Download Restriction: no
    File URL: http://www.economics.nuig.ie/resrch/paper.php?pid=39
    File Function: Revised version, 1999
    Download Restriction: no
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    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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