A General Equilibrium Analysis of Foreign Exchange Shortages in a Developing Economy

Bibliographic Data

ID9704515
AuthorsKemal Dervis, Jaime De Melo (0000-0002-1509-5239), Sherman Robinson (0000-0002-5478-9372)
Year1981
Volume91
Issue364
Pages891
Publication date1981-12-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.2307/2232498
OpenAlexW2150104164
LanguageEN
Citations received5
References cited5

An acute shortage of foreign exchange has been a recurring problem for many developing economies. This paper reexamines the foreign exchange gap issue and the debate between structuralists and neoclassicists by providing a quantitative assessment of the role of different assumptions about the values of key trade elasticities. It also seeks to complement the existing descriptive analysis of the consequences of alternative adjustment mechanisms with a quantitative analysis that indicates the relative importance of different behavioural assumptions and policy regimes. The empirical analysis is based on a computable general equilibrium model which is Walrasian in spirit and captures price mechanisms, market interactions, and structural interdependence in a non-linear multisector framework. The analysis lends support to the structuralist view that it is not sufficient to look at problems of adjustment only at the macroeconomic level

Economic shortage · Economics · Economy · Foreign exchange · General equilibrium theory · International economics · Macroeconomics · Monetary economics · Economic Theory and Policy · Global Financial Crisis and Policies · Global trade and economics