Exchange rate policy and export performance in a landlocked developing country: The case of Nepal

Ramesh Paudel; Paul Burke

doi:10.1016/j.asieco.2015.04.003

Exchange rate policy and export performance in a landlocked developing country: The case of Nepal

Ramesh Paudel, Paul Burke

Research output: Contribution to journal › Article

Abstract

This paper examines the implications of Nepal's exchange rate policy for its export performance over the period 1980-2010. We first document Nepal's long-standing currency peg against the Indian rupee and that Nepal's real exchange rate appreciated substantially from the late 1990s. We then employ a gravity modeling approach to confirm that this real exchange rate appreciation has adversely affected Nepal's exports, especially to third-country markets. Nepal's exchange rate-related export competitiveness trap provides a motivation to reconsider the current peg.

Original language	English
Pages (from-to)	55-63
Journal	Journal of Asian Economics
Volume	38
DOIs	https://doi.org/10.1016/j.asieco.2015.04.003
Publication status	Published - 2015

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10.1016/j.asieco.2015.04.003

http://hdl.handle.net/1885/14018

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title = "Exchange rate policy and export performance in a landlocked developing country: The case of Nepal",

abstract = "This paper examines the implications of Nepal's exchange rate policy for its export performance over the period 1980-2010. We first document Nepal's long-standing currency peg against the Indian rupee and that Nepal's real exchange rate appreciated substantially from the late 1990s. We then employ a gravity modeling approach to confirm that this real exchange rate appreciation has adversely affected Nepal's exports, especially to third-country markets. Nepal's exchange rate-related export competitiveness trap provides a motivation to reconsider the current peg.",

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AB - This paper examines the implications of Nepal's exchange rate policy for its export performance over the period 1980-2010. We first document Nepal's long-standing currency peg against the Indian rupee and that Nepal's real exchange rate appreciated substantially from the late 1990s. We then employ a gravity modeling approach to confirm that this real exchange rate appreciation has adversely affected Nepal's exports, especially to third-country markets. Nepal's exchange rate-related export competitiveness trap provides a motivation to reconsider the current peg.

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DO - 10.1016/j.asieco.2015.04.003

M3 - Article

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VL - 38

SP - 55

EP - 63

JO - Journal of Asian Economics

JF - Journal of Asian Economics

ER -

Exchange rate policy and export performance in a landlocked developing country: The case of Nepal

Abstract

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