scholarly journals An Evaluation of the Contractionary Devaluation Hypothesis

2007 ◽  
Author(s):  
Ricardo Bebczuk ◽  
Arturo José Galindo ◽  
Ugo G. Panizza
Keyword(s):  
Contractionary Devaluation

scholarly journals An Evaluation of the Contractionary Devaluation Hypothesis

2010 ◽  
pp. 102-117 ◽  
Author(s):  
Ricardo Bebczuk ◽  
Arturo Galindo ◽  
Ugo Panizza
Keyword(s):  
Contractionary Devaluation

Contractionary Devaluation Risk: Evidence from the Free Silver Movement, 1878–1900

2020 ◽  
Vol 102 (4) ◽  
pp. 705-720
Author(s):  
Colin Weiss
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Industrial Production ◽  
Gold Standard ◽  
The United States ◽  
Economic Shocks ◽  
Significant Fall ◽  
Contractionary Devaluation

I identify significant effects of devaluation risk on interest rates and output using US silver coinage policy news between 1878 and 1900 as clean shocks to exchange rate expectations. The Free Silver movement heightened fears the United States would abandon the gold standard and depreciate the dollar. Because Congress, rather than a central bank, set silver coinage policy, silver policy news was likely uncorrelated with economic shocks. Corporate bonds exposed to dollar devaluation returned an additional 1 percent relative to safer bonds when silver risk decreased. Additionally, increased silver coinage risk is associated with an economically significant fall in industrial production.

scholarly journals An Evaluation of the Contractionary Devaluation Hypothesis

2006 ◽  
Author(s):  
Ricardo Bebczuk ◽  
Arturo José Galindo ◽  
Ugo G. Panizza
Keyword(s):  
Contractionary Devaluation

scholarly journals Can Devaluation Cause Perverse Effects if the Macroeconomy is Stable?

1994 ◽  
Vol 33 (4II) ◽  
pp. 1033-1042
Author(s):  
Syed Zahid Ali ◽  
W. M. Scartil
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Foreign Exchange Market ◽  
Correspondence Principle ◽  
Aggregate Demand ◽  
Balance Of Payments ◽  
Exchange Market ◽  
Economic Stability ◽  
Contractionary Devaluation ◽  
Necessary And Sufficient

The theoretical literature on devaluation has involved an appeal to the Correspondence Principle for many years. In the early work, it was noted that a devaluation would improye the trade balance only if the Marshall-Lerner condition held, and this restriction was also necessary and sufficient for stability in the foreign exchange market. Thus, the presumption of economic stability precluded the perverse outcome. More recently, analysts have viewed this early work as limited in that it considered only the aggregate demand effects of the exchange rate, and it did not consider more general specifications of dynamics. The more recent work for example, Buffie (1986) and Lizondo and Montiel (1989) involves intermediate imports and a fully specified aggregate supply sector, and this work recognises that there are at least two kinds of perverse results that can follow from devaluation: the balance of payments can worsen, and the level of employment can fall. (This latter outcome is the so-called contractionary devaluation possibility.)

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