Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

S. V. Bokil

Abstract

This paper attempts to present the progress of research work on exchange rates during the recent years. It has been divided into three sections. Section I presents the work that was carriecd on within the Keynesian framework. Section II presents a review of monetary models of exchange rate determination and frustrations met in that area. It also comments on the new emerging literature on macro-economic modelling. Section III presents a summary of the work on the effects of large exchange rate shocks on prices and quantities. Here, it first discusses the exchange rate pass through to export/import prices and quantities and then takes up an analysis of new concept named as "hysteresis". The paper offers some concluding remarks.

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S. V. Bokil

Abstract

Since the late sixties, this question has continued to engage the attention of the leading international trade theorists and empirical researchers. It has led to two distinct enquiries: 1. How to trace resource allocation effects of a Restricted Regime? 2. How to measure its economic costs? Two separate schools have distinctly centred round each of these questions. While the concept of effective protective rate (EPR) was designed to answer the first question, the concept of domestic resource cost (DRC) sought to deal with the second. The first is a positive question while the second is a normative one.

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