@techreport{NBERw12219,
 title = "Are Valuation Effects Desirable from a Global Perspective?",
 author = "Pierpaolo Benigno",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "12219",
 year = "2006",
 month = "May",
 URL = "http://www.nber.org/papers/w12219",
 abstract = {Recent studies have emphasized the role of valuation effects due to exchange rate movements in easing the process of adjustment of the external balance of a country. This paper asks to what extent valuation effects are desirable from a global perspective as a mean to achieve an efficient allocation of resources. In a frictionless world, it is desirable to have large movements in prices and exchange rates. But once a small concern for price stability is introduced not only should prices be stabilized but also the response of the exchange rate should be muted. There is a minor role for valuation effects that depends both on the size and composition of assets and liabilities.},
}