Abstract:

Currency devaluation entails the application of certain monetary policies by the central bank of a country which lead, ceteris paribus, to a reduction in the value of domestic currency in relation to other foreign currencies. The objectives of such currency devaluation can be various: (a) to keep nominal wage rates at constant level or to increase them while decreasing actual wages; (b) to favor debtors to the detriment of creditors; (c) to encourage exports and reduce imports etc. (Mises 2008, 783-784).