Anticipated Devaluations

Guillermo Calvo

International Economic Review, 1989, vol. 30, issue 3, 587-606

Abstract: The effect of a future anticipated devaluation is studied in the context of Sidrauski-type model without capital mobility. When the public is compensated for the real balance effect of the devaluation, the current account deteriorates and the interest rate increases before the devaluation occurs; when the devaluation takes place, the current account turns into surplus and the interest rate suffers a precipitous fall. If the public is not compensated, results are similar after the devaluation, but they may have the opposite sign in the transition. A full characterization is, however, provided. Linkages with policy credibility issues are briefly discussed. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://links.jstor.org/sici?sici=0020-6598%2819890 ... O%3B2-7&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:30:y:1989:i:3:p:587-606

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and ().