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"Beggar-thy-neighbor" or "beggar-thyself"? the income effect of exchange rate fluctuations


Abstract: This paper analyzes the impact of exchange rate fluctuations when they are only partially passed through to consumer prices. We show that an exchange rate depreciation does not necessarily have a beggar-thy-neighbor effect and may in fact have an opposite, or beggar-thyself, effect. The direction of the welfare effect depends on who owns the firms importing goods from producers and selling them to consumers, an issue that has not been explored in the earlier literature

Keywords: Foreign exchange rates; International trade; Prices;

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Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2000

Number: 112