Stabilization Policies in Developing Countries with a Parallel Market for Foreign Exchange : A Formal Framework /
The paper develops and tests a model of a developing economy that incorporates trade and capital restrictions, illegal transactions, a parallel foreign exchange market, currency substitution features, and forward-looking rational expectations. Temporary expansionary demand policies are associated wi...
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| Format: | Journal |
| Language: | English |
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Washington, D.C. :
International Monetary Fund,
1990.
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| Series: | IMF Working Papers; Working Paper ;
No. 1990/016 |
| Online Access: | Full text available on IMF |
| Summary: | The paper develops and tests a model of a developing economy that incorporates trade and capital restrictions, illegal transactions, a parallel foreign exchange market, currency substitution features, and forward-looking rational expectations. Temporary expansionary demand policies are associated with an increase in output and prices, a fall in the stock of net foreign assets, and a depreciation of the parallel exchange rate. The speed of adjustment is inversely related to the degree of rationing in the official foreign currency market. A once-for-all devaluation of the official exchange rate has no long-term effect on the premium. |
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| Item Description: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Physical Description: | 1 online resource (44 pages) |
| Format: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Access: | Electronic access restricted to authorized BRAC University faculty, staff and students |