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Exchange Rate Pass-Through and Unemployment Dynamics

Author

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  • Chak Hung J. Cheng

    (Assistant Professor of Economics, Department of Economics and Finance, Murray State University, United States)

Abstract

This paper develops a small open economy model with nominal rigidities and search-matching frictions to study the implications of incomplete exchange rate pass-through for unemployment dynamics. The model shows that incomplete exchange rate pass-through to the prices of imported goods has a larger impact on unemployment movements than does incomplete pass-through to the prices of imported inputs. Also, the effect of delayed exchange rate pass-through on unemployment dynamics depends critically on the nature of the shock that disturbs the economy.

Suggested Citation

  • Chak Hung J. Cheng, 2013. "Exchange Rate Pass-Through and Unemployment Dynamics," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(8), pages 1-17, August.
    • Handle: RePEc:mir:mirbus:v:3:y:2013:i:8:p:1-17
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    References listed on IDEAS

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    1. Chak Hung J. Cheng, 2013. "Exchange Rate Pass-Through and Unemployment Dynamics," International Journal of Business and Social Research, LAR Center Press, vol. 3(8), pages 1-17, August.

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