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摘要：本文是关于政治经济学国际金融的一篇essay，一个国家的政府想要达到的信誉，价格和宏观经济稳定，通常选择以另一种专业，稳定，低通货膨胀的货币钉住其货币汇率。这样做主要是为了恢复市场参与者的信心。可以做到这一点的方法可以是通过金融市场的公开市场操作，在远期外汇市场干预，以及改变银行准备金要求这一些方法。

ill occur immediately and some benefits are in store for later, but if we are lucky the future costs from delaying adjustment might not occur, making devaluation a decision dilemma.

Political Strength

Let——s just for a second think that government leaders are not myopic and they are able to overcome the political biasness substance within themselves, they still may not be able to put into action the much needed policies.

It will largely depend on the political strength that the government has. The scope of action is limited to the extent of the numbers in the parliament. Governments with a strong majority in democratic countries may have a larger scope for doing the right thing compared to those countries, which are politically unstable, regardless of short-term effects of popularity.

Furthermore, there are countries that have other players with veto powers making the process even more delicate as the government hands get tied up. Finally, having in mind the perception that general public considers devaluation as an economic cost; the opposition in the parliament will tend to play a passive role as they would chose not to be seen as cooperating with the government to devalue.

Effects of Devaluation

One of the main concerns of devaluation is that higher import prices and the stimulation of a greater demand for domestic products can lead to inflation. One way to control inflation is that governments have to increase interest rates, which in turn will lead to a slower economic growth.

The second risk of devaluation is psychological. Because devaluation is considered as an economic weakness, the creditworthiness of the country may be in danger. In other words, devaluation may decrease investor confidence and make the country’s ability to attract foreign investment very difficult.

Another consequence is a chain reaction of devaluations. If our trading partners, for example, know that we have devalued, to protect themselves from negative exports, they might possibly do the same thing. This is usually done to offset the effects of their trading partner’s devaluation. Such policies, also known as “beggar thy neighbor” tend to amplify economic difficulties and create financial instability in those markets.

Cases From the Past When Devaluation Eventually Occurred:

We are aware that devaluation is an effective policy tool for adjusting currencies and revising relative prices. Furthermore, there is a clear condition that price elasticities in f本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。