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Trade Liberalization with a Fixed Exchange Rate

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  • Londero, Elio

Abstract

When the nominal exchange rate is fixed (it cannot be devalued), trade liberalization would normally require a reduction in the absolute prices of non-traded goods in order to obtain the real depreciation needed. This paper analyzes the difficulties in achieving that real depreciation, and the effects of the persistent overvaluation that may result from labor market restrictions and capital inflows. Issues regarding stabilization cum trade liberalization, as well as sequencing with other reforms, are also explored.

Suggested Citation

  • Londero, Elio, 1997. "Trade Liberalization with a Fixed Exchange Rate," MPRA Paper 85340, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85340
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    References listed on IDEAS

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    Cited by:

    1. Elio Londero, 2001. "The alleged countercyclical nature of Argentina's exports of manufactures," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(2), pages 151-173.
    2. Ekanem, Nkanta Frank, 2002. "Differential impact of exchange rate on US trade with two major and two minor trading partners in Africa," Journal of Economics and Business, Elsevier, vol. 54(5), pages 557-571.
    3. Elio Londero, 2003. "Trade liberalization and adjustment in Argentina," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(3), pages 225-246.

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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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