Even though real exchange rate has an important impact on sustainable export and economic growth for small open economies, its impact on income distribution and transmission mechanism was never investigated. The paper shows that improved income distribution, through its impact on the price of...

Even though real exchange rate has an important impact on sustainable export and economic growth for small open economies, its impact on income distribution and transmission mechanism was never investigated. The paper shows that improved income distribution, through its impact on the price of...

The author provides theoretical and empirical evidence of a negative association between income inequality and real exchange rates. First, he builds a theoretical model showing the transmission mechanism from inequality to real exchange rates. Second, using cross-country data, he demonstrates...