Exchange rate as a monetary policy tool: effects on gender inequality and development

The post-Keynesian economics (PKE) literature has long emphasized the different channels through which monetary policy may impact income distribution. In developing economies, the exchange rate channel is important since it is directly related to inflation and capital flows and influences long-run growth by shaping structural changes. However, even though the PKE literature acknowledges the importance of interest and exchange rates in shaping the distributional conflict, less attention has been paid to other dimensions of inequality. This chapter contributes to the literature by exploring how exchange rates affect gender inequality in the context of developing economies. It elucidates three main transmission channels through which that can occur: (1) the labor market channel; (2) the income channel; and (3) the balance sheet channel. With an empirical exercise for selected countries in Asia and Latin America, the authors stress the necessity of single-country analysis when dealing with gender inequality in the context of developing economies. Nonetheless, the lack of data for countries or region-specific studies poses a big challenge to this agenda.