capital, and finally will correct the balance of payments. Second, the country can allow the devaluation of national currency … policy response (devaluation) was associated with smaller loss of output than the first type (monetary contraction). The 2008 …

. If relative prices and terms of trade exhibit some flexibility conforming to the law of one price, a devaluation by one … better off by maintaining a peg in response to its partner's devaluation. If instead deviations from the law of one price are … market may disappear. However, a country's devaluation has a negative welfare impact on the economies of its trading partners …

capital, and finally will correct the balance of payments. Second, the country can allow the devaluation of national currency … response (devaluation) was associated with smaller loss of output than the first type (monetary contraction). 2008 …