For the last half century, trade theorists, development economists, and development practitioners have been calculating what was claimed to be the shadow price of scarce foreign exchange. In fact, what they have been calculating is the social value of the receipt of a unit of a numeraire good...

Summary We identify the non-Walrasian, fix-price, flex-quantity, temporary equilibria of a specific factors economy that has a traded and a nontraded sector. In this framework, we investigate the effects of exchange rate shocks on capacity utilization and employment of labor. We find that the...

In general equilibrium under constant returns to scale and perfect competition the normative theory of international trade is examined for a monetary, not a barter, economy. Persons exhibit flow demand for real balances just as they do for commodities because money provides well-being salient...

The authors develop an "intertemporal," two-period, two-sector, specific factor model, characterized by generalized wage differentials, and show that a number of pathological results in the domestic distortions literature are all but eliminated. In this model, in contrast to the standard...