Does devaluation cause stagflation?

Presents a simple macro-economic model in which devaluation influences real income and output both through the cost of imported inputs on the supply side of the economy and through exports, imports, and expenditures on the demand side. Statistical estimates of the structural parameters of the model for a group of ten industrial and developing countries are used to show that the demand effects dominate the cost effects in most cases, thus supporting the traditional view that devaluation has positive real effects in these countries in the short to medium run.-Authors