Greenwood, Jeremy; Kimbrough, Kent P. - In: Canadian Journal of Economics 20 (1987) 2, pp. 271-88
A choice-theoretic, cash-in-advance model is constructed to examine foreign-exchange controls. While foreign-exchange controls improve the trade balance and the balance-of-payments (or exchange rate) they reduce welfare for a distortion-free, small, open economy. This is because foreign-exchange...