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Impact of exchange rate volatility on Indonesia's trade performance in the 1990s

  • Siregar, Reza
  • Rajan, Ramkishen S.

Whether a real devaluation ultimately proves to be expansionary or contractionary depends on whether the boost given to the exportables sector offsets any possible output-depressing effects that may accompany the expenditure-switching policy. Failure of the exportables sector to adequately respond to the price incentives is a virtual guarantee that devaluation will be contractionary. This appears to have been the experience of Indonesia, the country worst hit by the crisis of 1997-98. This paper explores whether the increased exchange rate variability of the Indonesian rupiah post 1997 may have been a cause for the countryÂ’s poor export performance.

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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 18 (2004)
Issue (Month): 2 (June)
Pages: 218-240

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Handle: RePEc:eee:jjieco:v:18:y:2004:i:2:p:218-240
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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