Few subjects of international economics are so much exposed to heated debates as the exchange rate problem. From monetary crises and balance-of-payments adjustments to monetary zones, dealing with currency swings seems to embody any economist's worries about the rightfulness of economic models and the relevance of empirical analyses he or she has to choose. Is appreciation or depreciation good for a country's welfare? Would that answer still be valid in the long run? The unsettled character of the problem largely resides in the manifest contradiction between the firm theoretical predictions and their unconvincing empirical testing. One of the least uncontroversial tenets refers to the positive correlation between currency depreciation or devaluation (although of different origins, their effects are generally the same) and a country's current account. This paper attempts to test this prediction on the case of Romanian economy and to conclude on possible explanations of the theoretical-empirical conflict.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
7060.
Length: Date of creation: 15 Oct 2006 Date of revision:
02 Feb 2008 Publication status: Published in International Conference on Commerce - CD 1.1(2006): pp. 205-214 Handle: RePEc:pra:mprapa:7060
Find related papers by JEL classification: F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance F2 - International Economics - - International Factor Movements and International Business F1 - International Economics - - Trade
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