A Model of External and Internal Price Equilibrium in South Vietnam

by Kent P. Anderson

Download

Download Free Electronic Document

FormatFile SizeNotes
PDF file 0.3 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Purchase

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback9 pages $20.00 $16.00 20% Web Discount

Presents an economic model of the South Vietnamese economy. The model assumes constant domestic production; no exports, regardless of the level of the exchange rate; a domestic price level determined by the size of the money stock; and no government deficit that cannot be reduced by monetary or fiscal policy. The model shows that, even without flexible monetary and fiscal policies, the South Vietnamese government could use U.S. dollar aid combined with an appropriate exchange rate policy to control inflation. Where there is excess demand for foreign exchange — a likely condition in South Vietnam — devaluation at least to the point of zero excess demand for foreign exchange will reduce or eliminate the inflationary impact of the fiscal deficit with no reduction in real imports and hence in real income. The model also indicates that a U.S. aid policy designed to control inflation would discourage excess demand for foreign exchange.

This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.