TY  - JOUR
AU  - Stockman,Alan C.
TI  - Effects of Inflation on the Pattern of International Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 713
PY  - 1985
Y2  - December 1985
UR  - http://www.nber.org/papers/w0713
L1  - http://www.nber.org/papers/w0713.pdf
N1  - Author contact info:
Alan C. Stockman
Department of Economics
University of Rochester
Rochester, NY  14627-0156
Tel: 585/275-7214
Fax: 585/256-2309
E-Mail: N/A user is deceased
AB  - This paper examines the relationship between inflation, exchange rates, and the pattern of international trade and payments in a small economy with utility-maximizing agents and a transactions demand for money. Fully anticipated inflation has real effects in the model through its role as a tax on money and thereby on monetary transactions. An increase in the rate of monetary expansion generally reduces the value of domestic output and alters the composition of domestic production. The result is a change in the pattern of international comparative advantage and trade flows. The initial depreciation of the exchange rate following an increase in the rate of monetary expansion is accompanied by a trade surplus and capital outflow, while the subsequent depreciation is accompanied by a trade deficit.
ER  -