Kraay, Aart2012-06-042012-06-042007-04https://hdl.handle.net/10986/7043The Egyptian pound depreciated sharply between 2000 and 2005, declining by 26 percent in nominal trade-weighted terms. The author investigates the effect of the large depreciation on household welfare operating through exchange rate-induced changes in consumer prices. He estimates exchange rate pass-through regressions using disaggregated monthly consumer price indices to isolate the impact of the exchange rate changes on consumer prices. Then he uses household-level data from the 2000 and 2005 Egyptian household surveys to quantify the welfare effects of these consumer price changes at the household level. The average welfare loss due to exchange rate-induced price increases was equivalent to 7.4 percent of initial expenditure. Stronger estimated exchange rate pass-through for food items imply that this effect disproportionately affected poorer households.CC BY 3.0 IGOAVERAGE PRICEAVERAGE SPENDINGBENCHMARKCOMMODITIESCOMMODITYCONSUMER PRICECONSUMER PRICE INDEXCONSUMER PRICE INDICESCONSUMER PRICESCONSUMERSCONSUMPTION BUNDLECONSUMPTION BUNDLESCONSUMPTION PATTERNSDEMAND FUNCTIONDEMAND FUNCTIONSDEVALUATIONDEVELOPING COUNTRIESDEVELOPMENT ISSUESECONOMETRICSECONOMIC GROWTHECONOMIC REVIEWELASTICITYEXCHANGE RATESEXPENDITUREEXPENDITURE DISTRIBUTIONEXPENDITURE FUNCTIONFINANCIAL CRISISFOOD ITEMFOOD ITEMSFOOD PRICESGROWTH RATEHEADCOUNT MEASUREHOUSEHOLD CHARACTERISTICSHOUSEHOLD EXPENDITUREHOUSEHOLD LEVELHOUSEHOLD SIZEHOUSEHOLD SURVEYHOUSEHOLD SURVEYSHOUSEHOLD WELFAREINCOMEINCOME DISTRIBUTIONINCOME EFFECTINCOME LEVELSINFLATIONMACROECONOMIC SHOCKSMARGINAL COSTSMEASURING WELFAREMONEY SUPPLYNON-FOOD ITEMSNONTRADED GOODSPOLICY RESEARCHPOLITICAL ECONOMYPOOR HOUSEHOLDSPOVERTY ASSESSMENTPOVERTY LINESPRICE CHANGEPRICE CHANGESPRICE INCREASESPRICE VARIATIONPRODUCER PRICEPRODUCER PRICE INDEXPRODUCER PRICE INDICESPURCHASINGREAL INCOMERELATIVE PRICERURAL AREASRURAL HOUSEHOLDSSPATIAL VARIATIONSUBSTITUTESUBSTITUTIONSUBSTITUTION EFFECTURBAN AREASURBAN HOUSEHOLDSUTILITY FUNCTIONWAGESWORLD TRADE ORGANIZATIONWorld Bank10.1596/1813-9450-4182