TY  - JOUR
AU  - Burstein,Ariel
AU  - Eichenbaum,Martin
AU  - Rebelo,Sergio
TI  - Large Devaluations and the Real Exchange Rate
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10986
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10986
L1  - http://www.nber.org/papers/w10986.pdf
N1  - Author contact info:
Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu

Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu

Sergio Rebelo
Northwestern University
Kellogg School of Management
Department of Finance
Leverone Hall
Evanston, IL  60208-2001
Tel: 847/467-2329
Fax: 847/491-5719
E-Mail: s-rebelo@northwestern.edu
AB  - In this paper we argue that the primary force behind the large drop in real exchange rates that occurs after large devaluations is the slow adjustment in the price of nontradable goods and services. Our empirical analysis uses data from five large devaluation episodes: Argentina (2001), Brazil (1999), Korea (1997), Mexico (1994), and Thailand (1997). We conduct a detailed analysis of the Argentina case using disaggregated CPI data, data from our own survey of prices in Buenos Aires, and scanner data from supermarkets. We assess the robustness of our findings by studying large real-exchange-rate appreciations, medium devaluations, and small exchange-rate movements.
ER  -