The inflationary effects of devaluations in less developed countries is investigated. Using rate of change of effective exchange rates, it is shown that, for most countries in the sample, devaluations or depreciations are inflationary during the current floating exchange rate system. In addition to inflationary effects of depreciations, excees money supply, imported inflation, and expectation are also identified as additional sources of inflation in less developed countries.
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Bahmani‐Óskooee et al. (1992) studied this question.
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