Money and Exchange-Rate Adjustments in an LDC Context

Dante B. Canlas
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Dante B. Canlas: Professor of Economics, School of Economics, University of the Philippines Diliman

Philippine Review of Economics, 1994, vol. 31, issue 2, 86-103

Abstract: The paper presents theoretical models designed to examine, first, the links between a monetary expansion and the collapse of a fixed exchange rate, and second, the behavior of the real exchange rate following a devaluation. Under a free float, a monetary expansion leads to an appreciation in the long-run. If the monetary authority intervenes to prevent the depreciation, then foreign reserves decline to restore asset-market equilibrium.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:phs:prejrn:v:31:y:1994:i:2:p:86-103

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