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The responsiveness of the income balance to the exchange rate

Author

Listed:
  • Alberto Behar

    (International Monetary Fund)

  • Ramin Hassan

    (Cornerestone Research)

Abstract

We estimate income balance semi-elasticities with respect to the exchange rate for a wide sample of countries and for different types of income. Semi-elasticities are small for most countries. Therefore, the income balance is generally not a significant channel through which the exchange rate stabilizes the current account and most exchange rate misalignment estimates can focus on trade. However, our method allows for country variation and indicates a significant minority of exceptions.

Suggested Citation

  • Alberto Behar & Ramin Hassan, 2025. "The responsiveness of the income balance to the exchange rate," Economics Bulletin, AccessEcon, vol. 45(1), pages 617-622.
    • Handle: RePEc:ebl:ecbull:eb-25-00231
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    File URL: http://www.accessecon.com/Pubs/EB/2025/Volume45/EB-25-V45-I1-P55.pdf
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    More about this item

    Keywords

    Income balance; Exchange rate elasticity; Exchange Rate assessment;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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