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

International Monetary Fund

No 1988/099, IMF Working Papers from International Monetary Fund

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.

Keywords: exchange market; financial market; market transaction; transactions result; asset market relationship; Exchange rates; Currency markets; Trade balance; Multiple currency practices; Real exchange rates (search for similar items in EconPapers)
Pages: 24
Date: 1988-01-01
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Citations: View citations in EconPapers (1)

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