IDEAS home Printed from https://ideas.repec.org/a/ris/revlde/022038.html

Who Bears the Cost of Devaluation? Price Dynamics and Welfare Impacts During Bolivia’s 2024-2025 Currency Crisis

Author

Listed:
  • Werner L. Hernani-Limarino

    (Academia Boliviana de Ciencias Económicas (ABCE))

Abstract

This paper dissects the asymmetric price and welfare consequences of Bolivia’s de facto 60% exchange rate devaluation using high-frequency scanner data from a national supermarket chain. Despite no formal float, consumer prices rose by 15% –with imported goods jumping 16.8% and domestic goods lagging at 9.2%. The inflation burden fell unevenly: while the cost of high-income households’ baskets increased more (17.6%), their superior substitution elasticity allowed them to buffer welfare losses to 10.9% by shifting toward cheaper or newly available alternatives. In contrast, low-income households faced smaller price increases (14.5%) but larger welfare losses (13.4%) due to low substitutability and rigid consumption patterns tied to essential imported staples.

Suggested Citation

  • Werner L. Hernani-Limarino, 2025. "Who Bears the Cost of Devaluation? Price Dynamics and Welfare Impacts During Bolivia’s 2024-2025 Currency Crisis," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", vol. 23(44), pages 11-63.
    • Handle: RePEc:ris:revlde:022038
    DOI: 10.35319/lajed.202544558
    as

    Download full text from publisher

    File URL: https://iisec.ucb.edu.bo/publicacion/who-bears-the-cost-of-devaluation-price-dynamics-and-welfare-impacts-during-bolivias-2024-2025-currency-crisis
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.35319/lajed.202544558?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:revlde:022038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlos Gustavo Machicado (email available below). General contact details of provider: https://edirc.repec.org/data/iisecbo.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.