The paper attempts to provide a clearer conceptual basis for exchange rate policymaking in modified planned economies (MPEs), by clarifying the interactions involved in the simultaneous determination of the price level, terms of trade, real income and trade balance effects of a devaluation....

This paper examines the relationship between macroeconomic stabilization and market-oriented reform in planned economies. It emphasizes that market-oriented reform should enhance the likelihood that adjustment to exogenous disturbances will involve genuine adjustment in the sense of actually...