Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055442 | Economic Modelling | 2011 | 23 Pages |
Abstract
⺠A model which takes into account both the supply and demand-side effects of exchange rate variations is developed. ⺠Three kinds of expectations (adaptive, extrapolative and regressive) are considered. ⺠It is shown that the effect of currency depreciation on various economic variables depends largely on supply-side effects. ⺠In most cases, currency depreciation results in (i) a fall in output, (ii) an increase in prices and (iii) an improvement in the balance of trade. ⺠Under certain conditions, depreciation has a favorable effect on output but its effect on the balance of trade is negative.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Syed Zahid Ali, Sajid Anwar,