Major currency realignments and the terms of trade in developing countries

This paper assesses the impact of major currency realignments in the 1970s on LDC terms of trade. The issue of the appropriate weighting procedure in effective exchange rate calculation is discussed and alternative measures are compared. The evidence suggests that exchange rate realignments in the 1...

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Bibliographic Details
Published in:Journal of development economics 1982-04, Vol.10 (2), p.227-243
Main Authors: Bautista, Romeo M, Riedel, James
Format: Article
Language:English
Subjects:
Currencies
Developing countries
Foreign exchange rates
LDCs
Manycountries
Statistical analysis
Terms of trade
Theory
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Summary:This paper assesses the impact of major currency realignments in the 1970s on LDC terms of trade. The issue of the appropriate weighting procedure in effective exchange rate calculation is discussed and alternative measures are compared. The evidence suggests that exchange rate realignments in the 1970s had an influence on LDC terms of trade, but one of second-order magnitude. The impact on the structure of incentives and resource allocation is examined and policy implications are briefly discussed.
ISSN:0304-3878
1872-6089
DOI:10.1016/0304-3878(82)90018-9