Author Affiliation, Ana.
Economics; Faculty of Social Sciences
Macroeconomic adjustment in externally-dependent economies with parallel exchange markets
Social and Economic Studies
Date of Publication
Developes a model of the macroeconomic response to a monetary shock in an externally-dependent economy with a black market for foreign exchange. A model of the currency substitution genre is used to describe how monetary signals may be transmitted through a black market rate and the supply side of the economy to real output. The model demonstrates that monetary contraction may have an expansionary supply-side influence, and that this effect is stronger in the more dependent economies. The model also shows that devaluation is not neutral with respect to the black market premium.....