Graham Bird: "should developing counrties use currency use currency depreciation as a tool of balance of payments adjustments? a review of the theory and evidence and a guide to the policy maker" - journal of dev. studies, vol. xix, No. 4, July, 1983.

Abstract

In the article, Bird summarizes existing theoretical and empirical literature on the merits of the use of currency depreciation as a tool of balance of payments (bop) adjustments. In line with the posture of the International Monetary Fund (IMF) he argues that besides getting price incentives right, exchange rate depreciation often elicit the desired supply and demand responses for exports and imports. This effect is usually reflected even in short run correction of bop deficits, a situation he contends augurs well for developing economies.