Trade Reform Under Partial Currency Convertibility: Some Suggestive Results

28 Pages Posted: 15 Feb 2006

See all articles by Jagdeep S. Bhandari

Jagdeep S. Bhandari

Wake Forest University - School of Law; International Monetary Fund (IMF)

Date Written: August 2, 1988

Abstract

This paper discusses the macroeconomic implications of trade reform in the presence of capital account restrictions. The latter is modelled by recognizing prior constraints on free currency convertibility that are imposed via the use of a multiple exchange rate system. The results of the analysis indicate that the preferred sequence of liberalization need not be of the commonly advocated "current account first" variety, and that real depreciation rather than real appreciation is in fact a more probable outcome following domestic tariff liberalization.

JEL Classification: 1331, 4220, 4312, 4314

Suggested Citation

Bhandari, Jagdeep S., Trade Reform Under Partial Currency Convertibility: Some Suggestive Results (August 2, 1988). IMF Working Paper No. 88/69, Available at SSRN: https://ssrn.com/abstract=884935

Jagdeep S. Bhandari (Contact Author)

Wake Forest University - School of Law ( email )

P.O. Box 7206
Winston-Salem, NC 27109
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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