AID AND EXCHANGE-RATE ADJUSTMENT IN AFRICAN TRADE LIBERALIZATIONS

African countries in particular need to set macroeconomic policies which are compatible: that is, which coordinate trade, exchange rate and budgetary/monetary policies in such a way as to avoid depletion of foreign exchange reserves. This paper uses a simple computable general equilibrium model (CGE) to explore alternative compatible strategies in African-type economies. Three alternative strategies are examined. the first relies on devaluation, the second on programme aid, and the third involves a combination of exchange rate depreciation and aid. -M.Amos