ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Maxi Devaluations and Cooper s Hypothesis

Maxi Devaluations and Cooper's Hypothesis Ravindra H Dholakia IN a recent paper, Pronab Sen has defended Cooper's contractionary devaluation hypothesis in a very interesting and lucid way ('Cooper's Contractionary Devaluation Hypothesis: A Note', EPW, July 27). In the true spirit of macro modelling, he has effectively demonstrated the validity of Cooper's hypothesis with important modifications through the six propositions derived from a simplified macro model. His most important proposition is his Result 4 which states that gross complementarity of home goods and imports in the domestic consumption is the necessary condition for the devaluation to be contractionary. Since it is a distinct (and maybe most likely) possibility to find gross complementarity between the home goods and imports in the domestic consumption in several developing countries, Sen concludes "that 'maxi' devaluations do not always need to be accompanied by contractionary fiscal and monetary policies". Something more is needed to arrive at this conclusion than what is contained in Sen's note.

Subscribers please login to access full text of the article.

New 3 Month Subscription
to Digital Archives at

826for India

$50for overseas users

Get instant access to the complete EPW archives

Subscribe now


(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top