Devaluation (levels versus rates) and balance of payments in a cash-in-advance economy

Petrucci, Alberto (2003) Devaluation (levels versus rates) and balance of payments in a cash-in-advance economy. [Working Paper]. p. 20. Economics & Statistics Discussion Papers (No.1/03).

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Abstract/Index

This paper investigates the consequences of the currency devalution, both in levels and rates, on the balance of payments in a cash-in-advance economy with finite horizons, endogenous capital accumulation and international capital immobility. In this context, a once and for all currency devaluation induces a balance of payments surplus, whereas a sustained increase in the rate of devaluation produces, in principle, an ambiguous effect on the balance of payments. If however non-restrictive assumptions on some structural parameters are made, an increase in the devaluation rate leads to a balance of payments surplus, the exact opposite of Calvo's result (1981).

Item Type: Report / Paper (Working Paper)
Research documents and activity classification: Working Papers > Refereed Working Papers / of international relevance
Divisions: Department of Business and Management
Additional Information: The definitive version of the paper has been published in "Journal of International Money and Finance", Vol. 22(5), Pages 697-707, October 2003.
Uncontrolled Keywords: Devaluation; Balance of payments; Cash-in-advance constraint; Overlapping generations.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Maria Teresa Nistico
Date Deposited: 13 Dec 2010 15:02
Last Modified: 21 Apr 2015 23:13
URI: http://eprints.luiss.it/id/eprint/822

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