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  5. Wealth Redistribution after Exchange Rate Devaluations

AEA Papers and Proceedings

ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)

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Wealth Redistribution after Exchange Rate Devaluations

  • Andres Drenik
  • Gustavo Pereira
  • Diego J. Perez
AEA Papers and Proceedings
vol. 108, May 2018
(pp. 552–56)
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Abstract

We document that the likelihood of having assets in foreign currency is increasing in households' income within many emerging economies. This pattern leads to heterogeneous exposures of wealth to exchange rate movements. We analyze the redistribution of liquid wealth across households after nominal exchange rate devaluations due to the revaluation of nominal net wealth denominated in different currencies. We find that there is an important degree of redistribution from households with low income to those with high income.

Citation

Drenik, Andres, Gustavo Pereira, and Diego J. Perez. 2018. "Wealth Redistribution after Exchange Rate Devaluations." AEA Papers and Proceedings, 108: 552–56. DOI: 10.1257/pandp.20181070

Additional Materials

JEL Classification

  • D14 Household Saving; Personal Finance
  • D31 Personal Income, Wealth, and Their Distributions
  • F31 Foreign Exchange
  • O19 International Linkages to Development; Role of International Organizations