Exchange Rate Pass-Through and Unemployment Dynamics

Authors

  • Chak Hung J. Cheng Murray State University

DOI:

https://doi.org/10.18533/ijbsr.v3i8.284

Keywords:

exchange rate pass-through, unemployment, search and matching frictions

Abstract

This paper develops a small open economy model with nominal rigidities and search-matching frictions to study the implications of incomplete exchange rate pass-through for unemployment dynamics. The model shows that incomplete exchange rate pass-through to the prices of imported goods has a larger impact on unemployment movements than does incomplete pass-through to the prices of imported inputs. Also, the effect of delayed exchange rate pass-through on unemployment dynamics depends critically on the nature of the shock that disturbs the economy.

Author Biography

  • Chak Hung J. Cheng, Murray State University
    Assistant Professor of Economics, Department of Economics and Finance, Murray State University

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Issue

Vol. 3 No. 8 (2013): August

Section

Article

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