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If devaluation was effective, participants should collect more of the valued than of the devalued coins.
Now, if devaluation is a code word to mean raising the inflation target, fine.
Mr Cavallo has, on more than one occasion, made clear his preference for full dollarisation if devaluation were the only other option.One other effect of the new banking measures, the government believes, should be to improve tax collection and so help stabilise the government's deteriorating financial position.
The Greek solution back in 2010 was always default, a haircut, and if devaluation of the currency wasn't an option then a larger reduction in the debt than what happened.
Since devaluation sensitivity scores were standardized for inclusion in the regression model, the estimated coefficients in Table 1 imply that an increase of one standard deviation in devaluation sensitivity doubles the observable effect of model-based learning, whereas if devaluation sensitivity is one standard deviation below the mean, it eliminates model-based learning altogether.
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Let's see if devaluations really help trade, as Laffer did back then.
Jeremy Cook, chief economist at foreign exchange firm World First, said: "If the devaluation of the yuan and the weakness of Chinese and emerging market economies were the first shoe to drop, then the slowing of demand and sales for luxury retailers like Burberry is surely the next.
When asked if the devaluation would help his factory he said "that in the short term it would help keep the customers that he still has".
If these devaluations accelerate, the sector could see a wave of consolidation or significant investment from much larger companies like industrial giant General Electric, no stranger itself to the credit crisis.
An obvious (if temporary) solution, devaluation, is not possible within a currency union.
Industries may now lose some of the benefits of the devaluation if the government tightens monetary policy.
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