Contractionary Devaluation in Developing Countries: An Analytical Overview
J. Saul Lizondo
affiliation not provided to SSRN
Peter J. Montiel
Williams College - Department of Economics
June 29, 1988
IMF Working Paper No. 88/51
This paper evaluates the growing literature on whether devaluation has contractionary effects on output in developing countries. It explores the nature of the links between the exchange rate and real output within a unified, fairly general analytical framework which incorporates a number of the developing-country features cited in this literature. The analysis suggests that many of the arguments on both sides of the contractionary devaluation debate require modification and that a number of potential effects have been ignored. It is concluded that the direction of the impact effects of devaluation on real output is ambiguous on analytical grounds.
Number of Pages in PDF File: 56
JEL Classification: 131, 431working papers series
Date posted: February 15, 2006
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