Expansionary and contractionary effects of exchange rate shock in developing economies has been the subject of an extensive debate but the results are inconclusive. This study has been conducted to examine the repercussions of unexpected exchange rate depreciation in the Pakistan economy. Unlike the previous literature, this study utilizes a fairly large macroeconometric model constructed on the basis of Cowles Commission structural approach. The study explores that expansionary effect of exchange rate depreciation explained by the traditional theories of open economy macroeconomics persists only for one fiscal year but these theories don’t work in the long-run as contractionary phase starts in the subsequent years. Monetary and fiscal authorities are not neutral and contractionary policy is taken in response to depreciation which pushes the economy into recession. Stagflationary effects are clearly observed. However, improvement in foreign sector prolongs for a number of years and policy makers would have to face a trade-off between opposite response of output and current account balance. Hence, unexpected depreciation generates sharp cyclical fluctuations on demand which immediately transmit to supply side of the economy. In line with the views of “New Structuralists”, exchange rate depreciation may be considered as a source of shock rather than shock absorber in the case of Pakistan economy. Although this study is specifically estimated for the Pakistan economy, authors believe that their methodological contributions and results are of wider importance for policy makers in developing countries.

汇率冲击对发展中经济体的扩张和收缩影响一直是广泛辩论的主题，但结果尚无定论。本研究旨在检验汇率意外贬值对巴基斯坦经济的影响。与以往的文献不同，本研究利用了一个基于考尔斯委员会结构方法构建的相当大的宏观经济计量模型。该研究探讨了由开放经济宏观经济学传统理论解释的汇率贬值的扩张效应仅持续一个财政年度，但这些理论在长期内不起作用，因为紧缩阶段在随后几年开始。货币和财政当局不是中性的，采取紧缩政策以应对贬值，这将经济推入衰退。滞胀效应被清楚地观察到。然而，外国部门的改善会持续数年，政策制定者将不得不面临产出的相反反应与经常账户平衡之间的权衡。因此，意外贬值会在需求上产生剧烈的周期性波动，并立即传递到经济的供给侧。与“新结构主义者”的观点一致，在巴基斯坦经济的情况下，汇率贬值可能被视为冲击的来源而不是减震器。尽管这项研究是专门针对巴基斯坦经济进行估计的，