Should the Macedonian denar be devalued? Some evidence from the trade equations Cover Image

Should the Macedonian denar be devalued? Some evidence from the trade equations
Should the Macedonian denar be devalued? Some evidence from the trade equations

Author(s): Branimir Jovanović
Subject(s): Economy
Published by: Nomos Verlag
Keywords: devaluation; exchange rate; current account; trade; exports; imports; denar; Macedonia.

Summary/Abstract: Recently some have reminded us of the panacea for the Macedonian economy – the devaluation of the denar. We feel that the public deserves an explanation – why might devaluation help the economy and why we believe it would not help the Macedonian economy at the present moment. In theory, devaluation makes domestic products cheaper and foreign products more expensive, so it could stimulate exports and de-stimulate imports, improving the current account. In practice, however, Macedonian exports appear not to be dependent on the exchange rate, while imports appear to depend only very little. Thus, devaluing the denar is likely to have no major effect on the current account while the costs, in terms of the loss of confidence in the national currency, will be very high.

  • Issue Year: 2009
  • Issue No: 03
  • Page Range: 339-368
  • Page Count: 30
  • Language: English