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Why do Governments Delay Devaluation?The political economy of exchange rate inertia

Bird, GR and Willett, TD (2008) Why do Governments Delay Devaluation?The political economy of exchange rate inertia World Economics: the journal of current economic analysis and policy, 9, 4. pp. 55-74.

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Abstract

In the sequence of currency crises in emerging economies in the 1990s, there was an observed reluctance to devalue the exchange rate. Although ultimately adopted, the decision to devalue was usually delayed, often until it could no longer be avoided. While economic explanations of delay are available, they need to be combined with an evaluation of the political implications in order to secure a better understanding of exchange rate inertia. This article presents a political economy interpretation of delayed devaluation. It introduces and discusses the determining factors drawing on available empirical evidence and briefly applies these ideas to a range of specific examples. It also examines why there may be even more impediments in the way of timely revaluation. Since delayed exchange rate adjustment carries economic costs, the article also considers ways in which delay may be minimised.

Item Type: Article
Authors :
NameEmailORCID
Bird, GRg.bird@surrey.ac.ukUNSPECIFIED
Willett, TDUNSPECIFIEDUNSPECIFIED
Date : 2008
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:19
Last Modified : 17 May 2017 14:33
URI: http://epubs.surrey.ac.uk/id/eprint/818802

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