Contractionary Devaluation in Developing Countries: An Analytic Overview

International Monetary Fund

No 1988/051, IMF Working Papers from International Monetary Fund

Abstract: 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. MASTER FILES ROOM C-130 001

Keywords: WP; excess demand; real value; economic activity (search for similar items in EconPapers)
Pages: 56
Date: 1988-01-01
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