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Are Devaluations Contractionary in Asia?
Mohsen Bahmani-Oskooee, Souphala Chomsisengphet and Magda Kandil
Journal of Post Keynesian Economics
Vol. 25, No. 1 (Autumn, 2002), pp. 69-81
Published by: Taylor & Francis, Ltd.
Stable URL: http://www.jstor.org/stable/4538812
Page Count: 13
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The main purpose of this paper is to determine empirically whether currency depreciation is expansionary or contractionary in Asian countries. It is argued that by disrupting the operation of the financial sector and by introducing uncertainty among consumers and investors, currency depreciation could be contractionary. A reduced-form model is introduced and tested by means of cointegration analysis. The results support our theoretical argument that in many Asian countries depreciation is contractionary.
Journal of Post Keynesian Economics © 2002 Taylor & Francis, Ltd.