Comments and Discussion.

This article presents commentaries on the paper presented by Stephen P. Magee at the thirteenth conference of the Brooking Panel on Economic Activity, which studies the effects of outstanding contracts on the value of U.S. imports in the months immediately following a devaluation. According to William Branson, the paper makes a major contribution in pointing out the potentially large overstatements of imports after a devaluation, reflecting both the genuine effects of currency contracts and statistical errors. However, Branson found two problems in the paper. First, it seems that the capital losses during the currency-contract period may have little, if any, relation to the subsequent adjustment process. Second, the fact that Magee focused only on the import side of U.S. trade seems to imply that the adjustment process is somehow asymmetric. On the other hand, Lawrence Krause did agree with Branson that Magee deserves the thanks for tackling some nasty problems in the trade data. Though he may be telling the nonspecialist more than he wants to know about currency contracts, Magee is presenting valuable new evidence in an unexplored area. He shows convincingly that the errors in the import data can be large enough to distort unit-value indexes and perhaps large enough to explain, in part, why some econometric models were underpredicting U.S. imports for the periods after dollar devaluation.