Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123164
Authors: 
Fujii, Eiji
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5519
Abstract: 
Currency mismatch makes a debtor country suffer from domestic depreciation by magnifying the burden of its external debt. Since external debt can be paid back by exporting more than importing, a crucial channel for inducing recovery is net export. It is not warranted, however, that domestic depreciation will boost net export correspondingly if the currency compositions differ substantially between debt and trade. This paper examines the association between the debt revaluation and trade competitiveness gain effects of exchange rate fluctuations for middle and low income countries. Empirical results suggest that currency-compositional discord between debt and trade has significant welfare implications.
Subjects: 
currency mismatch
effective exchange rate
external debt
original sin
net export
JEL: 
F34
F31
Document Type: 
Working Paper

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