This paper reexamines the effectiveness of devaluation in trade-balance adjustment. The question is addressed in a framework that improves the previous empirical literature in several respects. The evidence indicates that devaluations have been a successful tool in inducing trade-balance...

The authors find strongly non-Ricardian results when they reestimate Paul Evans's (1988) model using a better approximation of the market value of wealth. The authors also examine the long-run properties of the data and find results consistent with their regression evidence when they allow for...