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Title: |
Devaluation and the Balance of Trade: A
Synthesis of Monetary and Elasticity Approaches |
| Author: |
Milani, Hamid |
| Author
Affiliation: |
U Wisc |
| Source: |
International Economic Journal, Autumn 1989, v. 3, no. 3, pp. 65-72 |
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Publication Date: |
Autumn 1989 |
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Abstract: |
The elasticities and monetary approaches
to balance of trade and balance of payments give different predictions
about the effects of changes in exchange rates on the trade balance and
balance of payments. This paper, using a theoretical model, supports the
arguments that elasticities and monetary approaches to balance of
payments are complementary theories since each is merely a fragment of a
larger system. It was shown that the short run effects of devaluation
are those produced by the elasticities approach and the long run effects
are those implied by the monetary approach. |
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