Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119628
Authors: 
Petrucci, Alberto
Year of Publication: 
2002
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 17.2002
Abstract: 
This paper investigates the consequences of the currency devaluation, 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).
Subjects: 
Devaluation
balance of payments
cash-in-advance constraint
overlapping generations
JEL: 
E21
E62
Document Type: 
Working Paper

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