Real exchange rates and the long-run effects of aggregate demand in economies with underemployment

Peter Skott, Martin Rapetti and Arslan Razmi ()
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Arslan Razmi: University of Massachusetts-Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Successful economic development to a large extent derives from the mobilization of underemployed resources. Demand policy can play an important role. It is critical, however, to consider balance of payments constraints and to ensure an expansion of investment in the modern sector. A combination of investment promotion and exchange rate intervention may be required to achieve these goals. JEL Categories: F43, O11, O41

Keywords: exchange rate; balance of payments; economic growth; inflation; aggregate demand; two-sector model (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-opm
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