Journal Article10.2307/3867174
Contractionary Devaluation in Developing Countries: An Analytical Overview
J. Saul Lizondo,Peter J. Montiel +1 more
250
TL;DR: The authors explored links between the exchange rate and real output within a unified, fairly general analytical framework that incorporates several of the developing country features cited in the literature and found that many of the arguments on both sides of the debate about contractionary devaluation require modification, and that the direction of the impact effects of devaluation on real output is ambiguous on analytical grounds.
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Abstract: The growing literature on whether devaluation has contractionary effects on output in developing countries is evaluated. The paper explores links between the exchange rate and real output within a unified, fairly general analytical framework that incorporates several of the developing country features cited in the literature. The analysis suggests that many of the arguments on both sides of the debate about contractionary devaluation require modification, that some potential effects have been ignored, and that the direction of the impact effects of devaluation on real output is ambiguous on analytical grounds.
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Long-term contracts, rational expectations and the optimal money supply rule
TL;DR: In this paper, a model with overlapping labor contracts with each labor contract being made for two periods was constructed, and the authors argued that monetary policy has the ability to affect the short run behavior of output, though it has no effects on long run output behavior.
Contractionary effects of devaluation
TL;DR: In this article, a simple model is developed to illustrate a number of contractionary effects of currency devaluation, some of which have been noted previously, and it is shown that depreciation can lead to a reduction in national output if imports initially exceed exports; there are differences in consumption propensities from profits and wages; and government revenues are increased by devaluation.
941
The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect
Lars E.O. Svensson,Assaf Razin +1 more
TL;DR: In this paper, the authors examined the effect of terms of trade changes on a small country's spending and current account, assuming optimizing behavior in an intertemporal framework with perfect international capital mobility.
620
Effects of a Devaluation on a Trade Balance
Sidney S. Alexander
- 01 Apr 1952
TL;DR: In this article, it is suggested that a more fruitful line of approach can be based on a concentration on the relationships of real expenditure to real income and on the relationship of both of these to the price levels, rather than on the more traditional supply and demand analysis.
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