IMF Working Papers

The Sectoral Effects of Real Depreciations in Latin America

By Sergi Lanau

November 16, 2017

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Format: Chicago

Sergi Lanau. The Sectoral Effects of Real Depreciations in Latin America, (USA: International Monetary Fund, 2017) accessed November 5, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This papers explores the effects of real exchange rate depreciations on growth across sectors, identifying export, cost, and import-penetration channels. It tests the existence and magnitude of these channels in a panel difference-in-difference methodology. Sectors that export more to begin with, grow relatively more in response to a depreciation. The same is true of sectors where import penetration in final demand is higher. There is no evidence that depreciations reduce growth by making imported inputs more expensive. A 10 percent real depreciation would increase growth of nontraditional sectors in Latin America by 0.6-2 percentage points mostly through the export channel.

Subject: Depreciation, Exchange rate adjustments, Exports, Foreign exchange, Imports, International trade, National accounts, Real exchange rates

Keywords: Depreciation, Depreciation episode, Exchange rate adjustments, Export channel, Exports, Global, Growth, Import-penetration channel, Import-penetration result, Import-penetration terms, Imports, Real exchange rate, Real exchange rates, WP

Publication Details

  • Pages:

    20

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/249

  • Stock No:

    WPIEA2017249

  • ISBN:

    9781484328477

  • ISSN:

    1018-5941

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