It is the job of the government to keep a country’s economy in check. But sometimes policies don’t work out as planned. Governments often take economic decisions that follow specific political agendas, and these decisions are not always beneficial for everyone.
Take, for example, a currency devaluation – the deliberate downward adjustment of the value of a country’s currency. This should, in theory, reduce the cost of a country’s exports and increase the international competitiveness of its goods. However, a currency devaluation can also impact consumers inside the country where it takes place.
We studied one such situation in 2015 where a currency devaluation affected the lives of consumers in the central Asian country of Kazakhstan. Our findings show that the currency devaluation made poor consumers poorer and wealthy consumers wealthier in relative terms.
