Does the Financial Channel of Exchange Rates Offset the Trade Channel?
Jonathan Kearns;Nikhil Patel;
Currency depreciation can stimulate domestic economic activity by boosting exports, but it can also become a hindrance to domestic financing. When banks and enterprises have substantial foreign currency liabilities, currency depreciation can create tighter domestic financial conditions that offset the benefits to foreign trade. By examining trade-weighted exchange rates and newly constructed debt-weighted exchange rates from the Bank for International Settlements, this article concludes this is particularly evident in emerging economies though less so in advanced economies.
【CateGory Index】： F832.6