Purpose – This paper seeks to draw together the various essential elements of the conflict inflation approach within the context of an open economy and to highlight the importance of global external factors in explaining inflation. Design/methodology/approach – A theoretical framework is...

Analyses how the status of balance of payments follows se\ill\ fulfilling expectations of currency devaluation. It is found that before a currency devaluation, whether the economy w\ill\ experience a balance-of-payments surplus or deficit crucial depends on the degree of capital mobility.

Develops and tests a monetary model of the parallel market for foreign exchange which incorporates forward-looking expectations and currency substitution features. Econometric results using quarterly data for a group of 12 developing countries show that changes in official exchange rates and...

Controls on short-term capital inflows or panic-driven capital outflows may benefit emerging markets that have fragile financial sectors and adjustable-peg currency regimes. However, the controls seen so far are relatively easy to evade, often complex and obscure, and supported by large...

Examines the effect of domestic inflation on recorded measures of the current account of the balance of payments. When domestic inflation is relatively high, it distorts conventionally measured current account deficits. This is because part of the recorded servicing payments on external...

Models fiscal policy interactions between fiscal authorities and private investors in the foreign exchange market in a game-theoretic framework. Using a two-period game, I consider the credible and noncredible announcements of the domestic fiscal authority with respect to the stance of its...

The demand for money is an important function of stabilization policies where such policies depend on the ability to manipulate the size of money supply in order to insulate real output from monetary disturbances. This paper investigates whether foreign money in Egypt should be included in...

Purpose – Since the introduction of the concepts of the J- and S-curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and to offer direction for future research. Design/methodology/approach – This is a review paper. As such,...

Purpose – The paper aims at developing a theoretical model for de facto dollarized small open economies focusing on currency substitution and nominal wages indexation to the exchange rate. Design/methodology/approach – The analysis is performed in a general equilibrium “New Open Economy...

Purpose – Since the introduction of the concepts of the J‐ and S‐curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and to offer direction for future research. Design/methodology/approach – This is a review paper. As...