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Devaluation, Devaluation Expectations and Price Dynamics

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  • Himarios, Daniel

Abstract

This paper investigates the inflationary impact of actual and expected de valuations. The empirical evidence indicates that (1) the effects of devaluation on the price level are felt for at least three years; (2) in the majority of the cases, the ceteris paribus inflationary impac t of devaluation is mild; (3) significant differences concerning the devaluation-inflation relationship exist across countries but there i s little evidence to suggest that such differences exist, in general, across time within a country; and (4) the anticipation of devaluatio n can have severe inflationary consequences and can lead to price lev el overshooting. Copyright 1987 by The Review of Economic Studies Limited.

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  • Himarios, Daniel, 1987. "Devaluation, Devaluation Expectations and Price Dynamics," Economica, London School of Economics and Political Science, vol. 54(215), pages 299-313, August.
    • Handle: RePEc:bla:econom:v:54:y:1987:i:215:p:299-313
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    Cited by:

    1. Boriss Siliverstovs & Olena Bilan, 2006. "Modeling Inflation Dynamics in Transition Economies: The Case of Ukraine," Eastern European Economics, Taylor & Francis Journals, vol. 43(6), pages 66-81, December.
    2. Christian C. Starck, 1989. "How are the key Finnish market interest rates determined?," Finnish Economic Papers, Finnish Economic Association, vol. 2(1), pages 39-47, Spring.
    3. Kenny, Geoff & McGettigan, Donal, 1996. "Non-Traded, Traded and Aggregate Inflation In Ireland (Part 2)," Research Technical Papers 3B/RT/96, Central Bank of Ireland.
    4. Ivaschenko, Oleksiy, 2007. "The welfare impact of the exchange rate adjustment in Seychelles and possible mitigation mechanisms," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 463-472.

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