Devaluation, Capital Mobility and the Current Account with Finite Horizons

Petrucci, Alberto (2005) Devaluation, Capital Mobility and the Current Account with Finite Horizons. [Working Paper]. LLEE, Roma. p. 18.

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This paper examines the effects of exchange-rate policies in an overlapping-generations small open economy facing perfect capital mobility. We find that a once-and-for-all devaluation spurs wealth formation and leads to a current account surplus, while a sustained increase in the rate of devaluation leaves nonhuman wealth and the current account balance unperturbed. Our results differ substantially from those obtained in homologous small open economies with infinite horizons.

Item Type:Report / Paper (Working Paper)
Research documents and activity classification:Working Papers > Refereed Working Papers / of international relevance
Divisions:Department of Economics and Finance > LLEE (Luiss Lab of European Economics)
Uncontrolled Keywords:Overlapping-generations. Exchange-rate policies. Current account. Intergenerational redistribution. Tasso di cambio. Svalutazione.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Silvia Capobianchi
Deposited On:25 Jun 2009 13:21
Last Modified:05 Feb 2013 22:40

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