'Beggar-Thy-Neighbor' or 'Beggar-Thyself'? The Income Effect of Exchange Rate Fluctuations
FRB of New York Staff Reports No. 112
41 Pages Posted: 22 Nov 2000
Date Written: September 2000
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.
JEL Classification: F31, F41, F42
Suggested Citation: Suggested Citation