In introducing an absorption approach to the trade balance, Alexander (1952) argued that if wages do not adjust fully to the inflationary effects of devaluation, devaluation can redistribute income from workers to producers in the form of increased profits. Increased profits, in turn, could give...

Previous studies that investigated the effects of exchange rate uncertainty on the trade flows of Sweden employed aggregate trade data either between Sweden and the rest of the world or at bilateral level between Sweden and her major trading partners. In this article, we disaggregate the trade...

In a 1952 article Alexander argued that currency devaluation could lead to a decline in domestic consumption by redistributing income from workers with high MPC to producers with low MPC. In this paper we include the exchange rate as another determinant of domestic consumption in addition to...

The relationship between exchange rate uncertainty and domestic investment has attracted some attention in macro literature. Previous studies that investigated the relation concentrated on firm level data with mixed results. In this paper we argue that the relationship applies equally at the...

Devaluation is said to redistribute income from the poor, who have a high Marginal Propensity to Consume (MPC) to the rich, who have a low MPC. Assuming the high MPC group to be unskilled labour and the low MPC group to be skilled labour, we investigate the impact of currency depreciation on...