Exchange Rate Reform and Structural Disturbances in a Dual Exchange Rate Economy

24 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: November 14, 1988

Abstract

This paper analyzes the implications of devaluation and a variety of structural disturbances in a dual exchange rate economy. A key feature of the model developed is its explicit recognition of both private (fraudulent) and officially-sanctioned cross transactions between the two exchange markets. The principal lesson to be learned from the analysis is that popular notions as to the effects of devaluation or of other disturbances are to be viewed with considerable caution when the dual rate regime involves inter-market transactions.

JEL Classification: 3116, 4312, 4314

Suggested Citation

Bhandari, Jagdeep S., Exchange Rate Reform and Structural Disturbances in a Dual Exchange Rate Economy (November 14, 1988). IMF Working Paper No. 88/99, Available at SSRN: https://ssrn.com/abstract=885086

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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