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Revisiting the exchange rate debate: the Jamaican experience

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  • Fiona Atkins

    (Economics Department, Birkbeck College, University of London, London, UK)

Abstract

This paper examines the impact of exchange rate devaluation in an open island economy. By taking account of the non-stationarity of the variables, and identifying the consequent cointegrating relation, the long-run and short-run impacts are identified. The results suggest a significant and negative long-run elasticity of output in response to a devaluation of the real exchange rate. The short-run dynamics indicate that the real exchange rate makes fairly rapid adjustment when there is deviation from the long-run equilibrium relation. Such rapid response to any demand side shocks suggest that the Jamaican economy may be susceptible to Dutch Disease effects. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Fiona Atkins, 2000. "Revisiting the exchange rate debate: the Jamaican experience," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 121-131.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:1:p:121-131
    DOI: 10.1002/(SICI)1099-1328(200001)12:1<121::AID-JID624>3.0.CO;2-T
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    References listed on IDEAS

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    1. Pastor, Manuel Jr., 1987. "The effects of IMF programs in the Third World: Debate and evidence from Latin America," World Development, Elsevier, vol. 15(2), pages 249-262, February.
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    3. Mohsin S. Khan & Malcolm D. Knight, 1981. "Stabilization Programs in Developing Countries: A Formal Framework (Programmes de stabilisation dans les pays en développement: cadre formel) (Programas de estabilización en los países en desarroll," IMF Staff Papers, Palgrave Macmillan, vol. 28(1), pages 1-53, March.
    4. Edwards, Sebastian, 1989. "The international monetary fund and the developing countries: A critical evaluation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 31(1), pages 7-68, January.
    5. Willem H. Buiter & Douglas D. Purvis, 1980. "Oil, Disinflation, and Export Competitiveness: A Model of the "Dutch Disease"," NBER Working Papers 0592, National Bureau of Economic Research, Inc.
    6. Edward, Sebastian, 1986. "Are Devaluations Contractionary?," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 501-508, August.
    7. Edwards, Sebastian, 1983. "The Short-Run Relation between Growth and Inflation in Latin America: Comment," American Economic Review, American Economic Association, vol. 73(3), pages 477-482, June.
    8. Jere R. Behrman & James Hanson, 1979. "Short-Term Macroeconomic Policy in Latin America," NBER Books, National Bureau of Economic Research, Inc, number behr79-1, March.
    9. Ruper T. G. Rhodd, 1993. "The effect of real exchange rate changes on output: Jamaica's devaluation experience," Journal of International Development, John Wiley & Sons, Ltd., vol. 5(3), pages 291-303, May.
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    Cited by:

    1. Abdallah, Ali, 2022. "Dépréciation réelle de la monnaie et croissance économique [Can real currency depreciation lead growth?]," MPRA Paper 113183, University Library of Munich, Germany.
    2. Renuka Mahadevan & John Asafu-Adjaye, 2013. "Exploiting comparative advantage in agriculture and resources: the way forward for Small Island States," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3), pages 320-343, July.
    3. Manoj Kumar DAS & Titiksha DAS, 2020. "Determinants of economic growth in India: A time series perspective," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(623), S), pages 263-280, Summer.
    4. Mohammad A. Razzaque & Sayema Haque Bidisha & Bazlul Haque Khondker, 2017. "Exchange Rate and Economic Growth," Journal of South Asian Development, , vol. 12(1), pages 42-64, April.
    5. DO Thi My Huong, 2019. "Real Exchange Rate and Economic Growth: An Empirical Assessment for Vietnam," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(6), pages 680-690, June.

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